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
THOMSON REUTERS INC. $38 continues to see weak demand from its clients in the finance sector. But sales of information products to other professionals, such as lawyers and doctors, continue to rise. Still, the company’s overall revenue fell 1.8% in the three months ended June 30, 2010, to $3.2 billion from $3.3 billion a year earlier (all amounts except share price in U.S. dollars). The company is also spending more on developing new products. That’s partly why its earnings per share fell 19.0%, to $0.47 from $0.58. Hold. CANADA BREAD CO. LTD. $44 earned $0.84 a share in the three months ended June 30, 2010. That’s down 5.6% from $0.89 a year earlier. Sales fell 7.8%, to $402.1 million from $435.9 million. The higher Canadian dollar hurt the contribution of the company’s bakery operations in the U.S. and U.K. Canada Bread also increased its advertising spending to promote new products. Hold. LOBLAW COMPANIES LTD. $43 will close its distribution centre in Halifax in October 2010. The closure will simplify its operations in Atlantic Canada, and lower its operating costs. The company still has five distribution facilities to serve its 123 supermarkets in Atlantic Canada. Buy.
BANK OF NOVA SCOTIA, $52.94, Toronto symbol BNS, earned $1.1 billion in the three months ended July 31, 2010. That’s up 14.1% from $931 million a year earlier. Earnings per share rose 12.6%, to $0.98 from $0.87, on more shares outstanding. Despite the gain, the latest earnings fell short of the consensus estimate of $1.00 a share. The bank set aside less money to cover bad loans because of the improving economy; that was the main reason for the higher earnings. In the latest quarter, loan-loss provisions fell 50.2%, to $276 million from $554 million a year earlier. Earnings at Bank of Nova Scotia’s Canadian banking division rose 21%, to a record $604 million, due to stronger demand for loans and wealth-management services. Earnings at the international-banking business rose just 2%, to $317 million, mostly because the higher Canadian dollar hurt their contribution. Without the negative impact of exchange rates, earnings at this business would have risen 11%. Earnings at the capital-markets division fell 35% to $305 million, as volatile stock markets and concerns over European sovereign debt hurt trading volumes....
POTASH CORP. OF SASKATCHEWAN, $154.99, Toronto symbol POT, continues to trade above the $130.00 U.S.-a-share hostile takeover offer from BHP Billiton Ltd. (New York symbol BHP). BHP is a recommendation of our Wall Street Stock Forecaster newsletter. Based on today’s exchange rate, Potash Corp. shares trade at 13.2% more than BHP’s offer. That suggests investors expect a higher bid. However, because of Potash’s $45.5-billion market cap (or the value of all of its outstanding shares), there are only a handful other companies that could afford to buy it. As well, the federal government would probably block an offer from a company controlled by a sovereign wealth fund. (Sovereign wealth funds are state-owned investment funds that are usually financed by an economic surplus. For example, China Investment Corp. is China’s sovereign wealth fund.) Moreover, BHP has little room to raise its offer. That’s because BHP’s shares also trade on the London Stock Exchange, which would require BHP to hold a special shareholders’ vote if the value of the deal is more than 25% of BHP’s market cap just prior to the takeover announcement. On this basis, BHP’s current offer represented 21% of its market cap....
POTASH CORP. OF SASKATCHEWAN, $157.06, Toronto symbol POT, jumped 35% this week after Australia-based BHP Billiton Ltd. (New York symbol BHP) launched a hostile takeover bid for the company. (BHP is the world’s largest mining company, and a recommendation of our Wall Street Stock Forecaster newsletter.) Potash Corp. is the world’s largest fertilizer producer. It has six potash mines in Saskatchewan and one in New Brunswick. Five of its mines have reserves of between 60 and 97 years. BHP is developing a potash mine near Potash Corp.’s operations in Saskatchewan, so a takeover of Potash Corp. would let it cut some costs. In October 2009, rumours of a takeover bid by BHP helped push up Potash Corp.’s shares to around $106 from $93....
TIM HORTONS INC., $37.05, Toronto symbol THI, is selling its half of its Maidstone Bakeries business to Aryzta AG of Switzerland. (Tim Hortons and Aryzta own the bakery through a joint venture.) Based in Brantford, Ontario, Maidstone supplies donuts and other baked goods to Tim Horton’s stores in Canada and the U.S. Tim Hortons will receive $475 million when the sale closes later this year. As part of the deal, Maidstone will continue to supply Tim Hortons until 2016. The company has the option to extend this agreement for another year, if necessary. That gives it plenty of time to find new suppliers, or build its own bakery. Meanwhile, Tim Hortons earned $94.1 million in the three months ended July 4, 2010. That’s up 21.0% from $77.8 million a year earlier. Earnings per share rose 25.6%, to $0.54 from $0.43, on fewer shares outstanding. The latest earnings beat the consensus estimate of $0.50 a share. That caused the stock to rise 4% this week....
Like most newspaper publishers, Torstar has suffered because of free or low-cost Internet competition in news and ads, as well as the recession. In response, it aggressively cut its costs, which helped it stay profitable, despite the weak economy. Torstar’s lower costs put it in a strong position to gain as the economy rebounds. Rising revenue from its Harlequin subsidiary and its other less-cyclical businesses also helps temper its risk. Moreover, growing demand for electronic books (or e-books) enhances Harlequin’s long-term growth potential. TORSTAR CORP. $9.49 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 79.1 million; Market cap: $750.7 million; Price-to-sales ratio: 0.5; Dividend yield: 3.9%; SI Rating: Above Average) publishes The Toronto Star, which is Canada’s largest daily newspaper in terms of circulation. The company also publishes three other daily papers and over 100 weeklies, mainly in southern Ontario. Newspapers account for about 70% of Torstar’s revenue, and 65% of its earnings....
INDIGO BOOKS & MUSIC INC. $15 (Toronto symbol IDG; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 24.7 million; Market cap: $370.5 million; Price-to-sales ratio: 0.4; Dividend yield: 2.9%; SI Rating: Average) also hopes to profit from growing sales of e-books. So far, however, e-books are cutting into its profit. In December 2009, the bookseller launched its Kobo e-book downloading web site. In May 2010, it started selling its own Kobo e-book reader. In its first quarter, which ended July 3, 2010, Indigo spent $3.2 million on Kobo development, and $1.0 million more on marketing and promotions. These start-up costs swelled Indigo’s losses in the quarter to $5.3 million, or $0.21 a share. A year earlier, it lost $2.8 million, or $0.09 a share. However, Indigo earns most of its profit in its third quarter, which includes the Christmas shopping season, and generally loses money the rest of the year....
The federal government plans to phase out coal-fired power plants by around 2025. Under the proposals, utilities would have to close their coal-fired plants when they reach 45 years of age, or when their power-purchase contracts with provincial electricity regulators expire, whichever is later. Coal-plant operators may extend the lives of these plants if they can lower their carbon emissions to the same level as natural-gas-fired plants. The plan is still in its early stages, and much could change before it comes into effect in 2011. The new rules will hurt some power producers more than others. But these four utilities should be able to pass most of the extra costs on to their customers. CANADIAN UTILITIES LTD. (Toronto symbols CU (class A non-voting) $47 and CU.X (class B voting) $47; Income Portfolio, Utilities sector; Shares outstanding: 125.8 million; Market cap: $5.9 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.2%; SI Rating: Above Average) distributes electricity and natural gas in Alberta. It also operates 20 power plants: 15 in Canada; three in Australia and two in the U.K. As well, the company sells its engineering services to other firms. ATCO Ltd. (also in this issue) owns 52.2% of Canadian Utilities....
MAPLE LEAF FOODS INC. $9.61 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 136.8 million; Market cap: $1.3 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.7%; SI Rating: Average) rose 5% in August after the Ontario Teachers’ Pension Plan sold some of its Maple Leaf shares to private equity fund West Face Capital Inc. at $8.25 a share. West Face now owns about 11.0% of Maple Leaf. The pension plan will hold on to its remaining 25.2% stake for now. West Face has a history of unlocking value in companies, so its involvement should help spur Maple Leaf’s share price. Maple Leaf Foods is a buy.
LOBLAW COMPANIES LTD. $43 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 277.3 million; Market cap: $11.9 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.0%; SI Rating: Above Average) is testing a new “minipharmacy” for its smaller supermarkets. Right now, it has in-store pharmacies in about half of its 1,000 stores. The company feels in-store pharmacies help it compete with pharmacy chains that are expanding their grocery departments, such as Shoppers Drug Mart. As well, new computers will speed up prescription processing, and give Loblaw an advantage. Loblaw is a buy.