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
POTASH CORP. OF SASKATCHEWAN $140 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 297.6 million; Market cap: $41.7 billion; Price-to-sales ratio: 6.7; Dividend yield: 0.3%; TSINetwork Rating: Average; www.potashcorp.com) has gained 2% since BHP Billiton Ltd. (New York symbol BHP) dropped its hostile, $130.00 U.S.-a-share takeover offer. That’s partly because the company plans to buy back $2 billion U.S. of its shares, probably by the end of 2010. Meanwhile, the company earned $1.32 a share in the three months ended September 30, 2010 (all amounts except share price and market cap in U.S. dollars). That’s up 61.0% from $0.82 a year earlier. Revenue jumped 43.3%, to $1.6 billion from $1.1 billion. Potash Corp. continues to benefit from rising demand for its fertilizers, particularly in India, China and other parts of Asia. The company sold 1.9 million tonnes of potash in the quarter, up 87.1% from a year earlier. The higher sales volumes offset a 21.5% decline in potash prices, to $305.60 a tonne from $389.24....
The Canadian retailing industry is intensely competitive. That’s why we prefer to focus on well-established retailers, such as the five we analyze below. Their high market shares and strong brands give them an edge. As well, all five trade at reasonable multiples to earnings. However, not all are buys right now. LOBLAW COMPANIES LTD. $41 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 279.5 million; Market cap: $11.5 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.loblaw.ca) is Canada’s largest food retailer. It now has around 1,000 company-owned and franchised stores. Loblaw continues to restructure its business, including upgrading its inventory-management systems and streamlining its distribution networks....
TRANSALTA CORP. $21 (Toronto symbol TA; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 219.5 million; Market cap: $4.6 billion; Price-to-sales: ratio: 1.7; Dividend yield: 5.5%; TSINetwork Rating: Average; www.transalta.com) has opened two new wind-power projects (one in Alberta and one in New Brunswick) ahead of schedule and on budget. About 12%, or 1,073 megawatts, of the power TransAlta generates comes from wind. The company continues to add to its renewable-power capacity. That will help it comply with tougher new environmental standards. TransAlta is a buy.
LINAMAR CORP. $20 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.7 million; Market cap: $1.3 billion; Price-to-sales ratio: 0.6; Dividend yield: 1.2%; TSINetwork Rating: Extra Risk; www.linamar.com) continues to benefit from the recovery of the North American auto industry. The auto-parts maker earned $0.32 a share in the three months ended September 30, 2010. That’s up sharply from $0.02 a year earlier. Sales rose 32.1%, to $556.3 million from $421.1 million. A 36.2% jump in sales of transmissions and other auto parts easily offset a 4.5% decline in sales of other industrial products. Linamar is a buy.
RIOCAN REAL ESTATE INVESTMENT TRUST $22 (Toronto symbol REI.UN; Units outstanding: 252.3 million; Market cap: $5.6 billion; Price-to-sales ratio: 6.3; Dividend yield: 6.3%; TSINetwork Rating: Average; www.riocan.com) operates 289 retail properties in Canada, mainly outdoor shopping malls. It also owns 28 malls in the U.S. through a joint venture it formed in 2009 with Cedar Shopping Centers Inc. (New York symbol CDR). RioCan owns 80% of this joint venture, and 14% of Cedar. The contribution from the new U.S. malls was the main reason why RioCan’s earnings rose 37.7%, to $39.2 million, in the three months ended September 30, 2010. A year earlier, the trust earned $28.4 million. Earnings per unit rose 33.3%, to $0.16 from $0.12, on more units outstanding. Cash flow per unit rose 20.0%, to $0.36 from $0.30. Revenue rose 14.6%, to $216.6 million from $189.0 million. RioCan pays monthly distributions of $0.115 a unit. The annual rate of $1.38 yields 6.3%. The trust paid out 95.4% of its cash flow in the past quarter. However, 16.0% of its investors prefer to receive new units instead of cash. On this basis, RioCan’s actual cash payout was a more reasonable 80.1% of its cash flow....
We advise most investors to confine their Finance-sector investments to Canada’s five big banks and other recommendations in our Conservative Growth Portfolio. However, if you can accept more risk, we also like Home Capital and Dundee. HOME CAPITAL GROUP INC. $48 (Toronto symbol HCG; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 34.7 million; Market cap: $1.7 billion; Price-to-sales ratio: 3.3; Dividend yield: 1.5%; TSINetwork Rating: Average; www.homecapital.com) is a mortgage lender that serves borrowers who don’t meet the more stringent criteria of larger, traditional lenders. In the three months ended September 30, 2010, Home Capital’s earnings rose 18.8%, to $45.4 million, or $1.31 a share. A year earlier, the company earned $38.2 million, or $1.10 a share. Low interest rates continue to fuel strong demand for residential mortgages and other loans. That lifted Home Capital’s revenue by 6.7%, to $133.8 million from $125.3 million. The company issued 17.8% more residential mortgages than in the year-earlier quarter. Non-residential mortgages rose 10.9%....
THE WESTAIM CORP. $0.55 (Toronto symbol WED, Aggressive Growth Portfolio, Finance sector; Shares outstanding: 580.6 million; Market cap: $319.3 million; Price-to-sales ratio: 1.8; No dividends paid; TSINetwork Rating: Speculative; www.westaim.com) owns Jevco Insurance Co., which sells insurance to high-risk drivers, as well as owners of motorcycles, snowmobiles and recreational vehicles. Jevco operates in Quebec and Ontario. The company bought Jevco for $264.2 million in March 2010. That’s why Westaim earned $5.9 million, or $0.01 a share, in the three months ended September 30, 2010. A year earlier, it lost $524,000, or $0.01 a share. However, Jevco faces strong competition from larger insurers. As well, its focus on high-risk drivers adds risk. Westaim is a hold, but only for highly aggressive investors.
TRANSCANADA CORP. $38 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 696.0 million; Market cap: $26.4 billion; Price-to-sales ratio: 3.2; Dividend yield: 4.2%; SI Rating: Above Average; www.transcanada.com) earned $374 million in the three months ended September 30, 2010. That’s up 11.6% from $335 million a year earlier. Earnings per share rose 10.2%, to $0.54 from $0.49, on more shares outstanding. These figures exclude gains and losses on contracts TransCanada uses to lock in prices on natural gas it has in storage. Revenue rose 3.9%, to $2.1 billion from $2.05 billion. Lower costs and higher production at the Bruce nuclear power complex in Ontario helped spur TransCanada’s earnings in the latest quarter. (The company owns 48.8% of the Bruce A reactors and 31.6% of the Bruce B reactors.) As well, TransCanada recently opened the first phase of its $12-billion U.S. Keystone pipeline, which pumps crude oil from Alberta to refineries in the U.S. Midwest. Keystone’s second phase should begin operating in the first quarter of 2011....
CENOVUS ENERGY INC. $32 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 752.0 million; Market cap: $24.1 billion; Price-to-sales ratio: 1.8; Dividend yield: 2.5%; TSINetwork Rating: Extra Risk; www.cenovus.com) earned $0.21 a share in the quarter ended September 30, 2010, down 63.2% from $0.57 a year earlier. Cash flow per share fell 44.7%, to $0.68 from $1.23. Lower natural-gas production and prices were the main reasons for the declines. Unplanned outages at two refineries in the U.S. Midwest also hurt the company’s results; Cenovus and ConocoPhillips (New York symbol COP) each own 50% of these refineries. However, the partners are expanding the refinery in Illinois. That should make this facility more profitable, starting in late 2011. Cenovus is a buy.
PRECISION DRILLING CORP. $9.04 (Toronto symbol PD; Aggressive Growth Portfolio, Resource sector; Shares outstanding: 275.7 million; Market cap: $2.5 billion; Price-to-sales ratio: 1.9; No dividends paid since February 2009; TSINetwork Rating: Extra Risk; www.precisiondrilling.com) provides contract-drilling services to land-based oil and gas producers. Precision owns 353 drilling rigs, including 202 in Canada, 148 in the U.S. and three in Mexico and other countries. Precision recently converted from an income trust to a regular corporation. Investors received one common share for each trust unit they held. The change is in response to Ottawa’s new tax on income-trust distributions, which comes into effect on January 1, 2011.