Dividend Stocks
Dividends can produce as much as a third of your total return over long periods, and you can even retire on dividends.
There are 4 key stock dividend dates that are involved with dividend payments:
1- The Declaration Date is several weeks in advance of a dividend payment—it’s when company’s board of directors sets the amount and timing of the proposed payment.
2- The Payable Date is the date set by the board on which the dividend will actually be paid out to shareholders.
3- The Record Date is for shareholders who hold the stock before the payable date and receive the dividend payment. That date is set any number of weeks before the payable date.
4-The Ex-Dividend Date is two business days before the record date and it’s when the shares begin to trade without their dividend. If you buy stocks one day or more before their ex-dividend date, you will still get the dividend. That’s when a stock is said to trade cum-dividend. If you buy on the ex-dividend date or later, you won’t get the dividend. The ex-dividend date is in place to allow pending stock trades to settle.
We think very highly of stocks that have been paying dividends for five or more years, at TSI Network. Many of these stocks fit in well with our three-part Successful Investor philosophy:
1- Invest mainly in well-established companies;
2- Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; and Utilities);
3- Downplay or avoid stocks in the broker/media limelight.
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Dividend Stocks Library Archive
TRANSCANADA CORP. $42 (www.transcanada.com) has restarted its Keystone crude oil pipeline after repairing a small leak at a pumping station in Kansas; Keystone pumps oil from Alberta to Oklahoma. The leak forced the company to shut down the pipeline for a week. This setback is not likely to hurt the company’s plan to extend Keystone to refineries on the U.S. Gulf Coast. U.S. regulators will make a final decision on the proposal later this year. Best Buy. SUNCOR ENERGY INC. $39 (www.suncor.com) produced an average of 162,000 barrels per day at its oil-sands projects in May 2011. That’s down 50.9% from 330,000 barrels in April 2011. The company has shut down one of its upgrading facilities for maintenance. Suncor expects to resume normal production by the end of June. Buy. IGM FINANCIAL INC. $49 (www.igmfinancial.com) reported that its assets under management rose 12.6%, to $133.5 billion, on May 31, 2011, from $118.5 billion a year earlier. IGM’s fee income varies with the value of the mutual funds and other investments it manages, so the company’s revenue and earnings gain when the value of these assets rises. Best Buy.
BANK OF NOVA SCOTIA, $58.48, Toronto symbol BNS, reported better-than-expected earnings this week. That’s mainly because it is putting less money aside to cover bad loans because of the improving economy. The bank also saw strong gains at its international-banking and wealth-management operations. In the three months ended April 30, 2011, Bank of Nova Scotia earned $1.5 billion. That’s up 40.7% from $1.1 billion a year earlier. Earnings per share rose 33.3%, to $1.36 from $1.02, on more shares outstanding. The latest earnings included a one-time gain of $286 million, or $0.26 a share. That’s mostly because new accounting rules forced the bank to revalue its original 18% stake in DundeeWealth Inc. in connection with its recent purchase of the remaining 82% of this company. DundeeWealth manages investments and operates a brokerage business. It also owns the Dynamic family of mutual funds, and provides financial-planning and investment advice....
BANK OF MONTREAL, $61.82, Toronto symbol BMO, continues to benefit as more borrowers pay back their loans on time. However, demand for new loans is slowing, and its credit-card customers are making fewer purchases. As well, other banks are paying higher interest rates to attract depositors. That is forcing Bank of Montreal to raise its rates in response. Even so, Bank of Montreal’s revenue rose 5.5%, in its 2011 second quarter, which ended April 30, 2011, to $3.2 billion from $3.05 billion a year earlier. Earnings rose 7.5%, to $800 million from $745 million a year earlier. Earnings per share rose 6.3%, to $1.34 from $1.26, on more shares outstanding. Without unusual items, such as costs related to its upcoming $4.1-billion, all-stock purchase of U.S.-based banking firm Marshall & Ilsley Corp. (New York symbol MI), earnings per share would have risen 5.5%, to $1.35 from $1.28. On that basis, the latest earnings beat the consensus estimate of $1.31 a share. Bank of Montreal expects to complete the Marshall & Ilsley purchase by July 31, 2011....
Three of Canada’s big-five banks, BANK OF NOVA SCOTIA, $58.49, Toronto symbol BNS, CANADIAN IMPERIAL BANK OF COMMERCE, $84.40, Toronto symbol CM, and TORONTO-DOMINION BANK, $84.15, Toronto symbol TD, have joined a new consortium called Maple Group Acquisition Corp. Other members of this group include National Bank and five major pension funds. Maple wants to buy a controlling interest in TMX Group Inc. (Toronto symbol X), which operates the Toronto Stock Exchange, the TSX Venture Exchange and the Montreal Exchange. In February 2011, TMX accepted a takeover offer from the London Stock Exchange Group. Under the terms of that offer, TMX shareholders would own 45% of the combined company, which would be the world’s second-largest stock exchange by market cap....
CANADIAN TIRE CORP., $62.38, Toronto symbol CTC.A, is buying The Forzani Group Ltd. (Toronto symbol FGL), which sells sporting goods through over 500 stores in Canada, including SportChek and Athlete’s World. Forzani gets 70% of its sales by selling clothing and footwear, so there is little overlap with the sports equipment (such as skates and hockey sticks) that Canadian Tire stores mainly sell. To put the $771-million purchase price in context, Canadian Tire earned $58.4 million, or $0.71 a share, in the three months ended April 2, 2011. That missed the consensus estimate of $0.72 a share. Still, the latest earnings are up 13.2% from $51.6 million, or $0.63 a share, a year earlier....
Telus is one of our top dividend-paying stocks. Meanwhile, it continues to grow due to its heavy investments in its wireless networks. Thanks to rising wireless revenue, the company has tripled its dividend since 2003. It now plans to raise its dividend twice a year to 2013, and increase the rate by 10% a year. Demand for wireless services should continue to rise. Right now, about 73% of Canadians use a wireless device. That should rise to around 80% in the next two years, as more people upgrade from standard cellphones to smartphones and tablet computers. TELUS CORP. (Toronto symbols T $52 and T.A $50; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 324 million; Market cap: $16.8 billion; Price-to-sales ratio: 1.7; Dividend yield: 4.2%; TSINetwork Rating: Above Average; www.telus.com) is Canada’s second-largest telephone company after BCE Inc. (Toronto symbol BCE)....
CANADIAN TIRE CORP. $61 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.4 million; Market cap: $5.0 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.canadiantire.ca) is buying The Forzani Group Ltd. (Toronto symbol FGL), which sells sporting goods through over 500 stores in Canada, including SportChek and Athlete’s World. Forzani gets 70% of its sales by selling clothing and footwear. So there is little overlap with the sports equipment, such as skates and hockey sticks, that Canadian Tire stores mainly sell. The $771-million purchase price is equal to 1.7 times the $453.6 million, or $5.56 a share, that Canadian Tire earned in 2010. The deal should close in the third quarter of 2011....
We continue to advise against overindulging in oil stocks. That’s because the Resource sector (including oil) is highly volatile, and no one can accurately predict future oil prices. For instance, after rising to $115 U.S. a barrel, oil dropped 16% in the first week of May 2011, to $97 U.S., on fears that the global economic recovery may be stalling. That’s why investors should stick with well-established oil producers with high-quality reserves and rising production, such as these three. All three should also benefit from the election of the Conservative majority government, which has promised not to impose onerous new carbon taxes or environmental regulations on oil-sands operators....
BELL ALIANT INC. $27 (Toronto symbol BA, Conservative Growth Portfolio, Utilities sector; Shares outstanding: 227.8 million; Market cap: $6.2 billion; Price-to-sales ratio: 1.0; Dividend yield: 7.0%; TSINetwork Rating: Above Average; www.bellaliant.ca) spent $120 million on capital upgrades in the first three months of 2011, up 26.7% from $94 million a year earlier. It spent most of this cash on upgrades to its high-speed Internet networks in Atlantic Canada. These upgrades are helping the company attract new Internet customers, and offsetting lower revenues from its traditional phone operations. Bell Aliant’s revenue fell 1.0% in the quarter, to $681.6 million from $688.7 million a year earlier. Earnings per share fell 24.5%, to $0.37 from $0.49, due to higher pension costs. However, free cash flow (cash flow minus capital expenditures) rose 55.4%, to $88.1 million from $56.7 million. That should let it keep paying quarterly dividends of $0.475 a share (annualized yield of 7.0%). Bell Aliant is a buy.
TORONTO-DOMINION BANK $82 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 883.1 million; Market cap: $72.4 billion; Price-to-sales ratio: 2.8; Dividend yield: 3.2%; TSINetwork Rating: Above Average; www.td.com) has agreed to sell its 13.46% stake in Maple Leaf Sports & Entertainment (MLSE) to the Ontario Teachers’ Pension Plan. MLSE owns professional sports teams (Toronto Maple Leafs, Toronto Raptors and Toronto FC) plus the Air Canada Centre arena in downtown Toronto. The bank did not disclose the price, but it likely made a substantial return on this investment. TD Bank is a buy.