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
Canada’s big five banks have long histories of annual dividend increases. However, rising loan losses and writedowns of illiquid securities stemming from the 2008/2009 financial crisis prompted them to conserve cash instead of raising dividends. Banking regulators around the world are now working on new regulations that would help avoid another crisis. The new rules will probably force banks to increase their capital reserves, which would help them absorb future loan losses. Canada’s banks are in much better shape than banks in other countries. They should have little trouble adapting when the new rules take effect in 2011. After that, we feel Canada’s banks will start raising their dividends again.
ROYAL BANK OF CANADA $52 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.4 billion; Market cap: $72.8 billion; Price-to-sales ratio: 2.0; Dividend yield: 3.8%; SI Rating: Above Average) is Canada’s largest bank, with total assets of $655.1 billion. In the three months ended April 30, 2010, Royal earned $1.3 billion, or $0.88 a share. That’s a big improvement over the $50 million, or $0.07 a share, it lost a year earlier. The year-earlier loss was mainly caused by a $1-billion writedown of goodwill related to U.S. banks that Royal had purchased. Without this charge, Royal would have earned $950 million, or $0.63 a share, in the year-earlier quarter. Revenue rose 3.0% in the most recent quarter, to $7.0 billion from $6.8 billion. Royal’s international operations account for roughly 10% of its revenue, and the stronger Canadian dollar cut their contribution by $534 million. The higher dollar also lowered the bank’s earnings by $0.06 a share. However, Royal is setting aside less cash to cover bad loans: its loan-loss provisions fell 48.3%, to $504 million from $974 million....
IGM FINANCIAL INC. $39 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 262.4 million; Market cap: $10.2 billion; Price-to-sales ratio: 4.4; Dividend yield: 5.3%; SI Rating: Above Average) reported that its clients redeemed $219.7 million of investments in May 2010, mainly because of stock-market volatility caused by the European debt crisis. Still, as of May 31, 2010, IGM’s assets under management were up 9.2%, to $118.5 billion from $108.5 billion a year earlier. That’s mainly because, despite recent volatility, stock markets are up about 10% from a year ago. IGM’s performance was much better than that of the Canadian mutual-fund industry, which posted an average 3.4% drop in assets under management for the same period. IGM’s fees rise and fall with the value of the mutual funds and other securities it manages, so the company’s revenue and earnings benefit when the value of these assets rise. IGM Financial is a buy.
DUNDEE CORP. $13 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 73.8 million; Market cap: $959.4 million; Price-to-sales ratio: 0.9; No dividends paid; SI Rating: Average) is a holding company with subsidiaries in three main areas: wealth management, real estate and resources. In the three months ended March 31, 2010, Dundee earned $23.9 million, or $0.27 a share. That’s a big improvement over the $8.2 million, or $0.11 a share, it lost a year earlier. In the latest quarter, Dundee realized an $18.6-million gain on the sale of securities. In the year-earlier quarter, it wrote down $9.0 million of securities. That was the main reason for the improved earnings. Dundee is a hold.
THOMSON REUTERS CORP. $37 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 831.1 million; Market cap: $30.8 billion; Price-to-sales ratio: 2.4; Dividend yield: 3.3%; SI Rating: Above Average) has two main divisions: Markets (60% of revenue), which sells financial information to banks and other financial institutions; and Professional (40%), which sells specialized information to professionals in the legal, accounting, scientific and health-care fields. The company gets about 60% of its revenue from North and South America, followed by Europe (30%) and Asia (10%). In the three months ended March 31, 2010, Thomson’s revenue rose 0.3%, to $3.14 billion from $3.13 billion a year earlier (all amounts except share price and market cap in U.S. dollars). Earnings fell 9.3%, to $304 million from $335 million. Earnings per share fell 10.0%, to $0.36 from $0.40, on more shares outstanding....
INDIGO BOOKS & MUSIC INC. $15 (Toronto symbol IDG; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 24.5 million; Market cap: $367.5 million; Price-to-sales ratio: 0.4; Dividend yield; 2.9%; SI Rating: Average) is seeing strong demand for its new Kobo electronic-book reader. That’s largely because the Kobo reader costs much less than its main competitor, Amazon.com’s Kindle. Indigo owns 57.7% of the Kobo joint venture; U.S.-based bookseller Borders Group Inc. (New York symbol BGP) and other private investors own the remaining 42.3%. The joint venture will soon start selling Kobo readers in the U.S., Australia and New Zealand. The partners also plan to launch Kobo in Europe, China and India. Indigo is a buy.
Loblaw aims to spur its growth by selling more non-food items, such as clothing and drugs. Metro hopes to attract more customers by improving its stores and launching new loyalty programs. We see both stocks as buys. LOBLAW COMPANIES LTD. $40 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 276.2 million; Market cap: $10.7 billion; Price-to-sales ratio: 0.4; Dividend yield: 2.1%; SI Rating: Above Average) is Canada’s largest food retailer, with roughly 1,000 stores across the country. Loblaw continues to benefit from its ongoing restructuring plan. The company is fixing its supply networks, improving its distribution centres’ productivity and installing new inventory-information systems. These moves helped increase Loblaw’s earnings by 25.7% in the three months ended March 27, 2010, to $137 million, or $0.49 a share. A year earlier, it earned $109 million, or $0.40 a share....
TECK RESOURCES LTD. $32 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 589.4 million; Market cap: $18.9 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.3%; SI Rating: Average) will develop the Aqqaluk Deposit at its Red Dog zinc mine in northwestern Alaska. This deposit will replace Red Dog’s nearly depleted main deposit. Environmental opposition has delayed this development. But Teck has received the necessary permits to begin work on this project. The company did not say how much the new mine will cost, or when it would begin production. However, Aqqaluk’s reserves should last 20 years. Teck Resources is a buy.
RIOCAN REAL ESTATE INVESTMENT TRUST $18 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 243.2 million; Market cap: $4.4 billion; Price-to-sales ratio: 5.7; Dividend yield: 7.7%; SI Rating: Average) continues to expand in the U.S. The trust recently formed a joint venture with Inland Western Retail Real Estate Trust, Inc. RioCan will own 80% of the new company, which will own eight malls in the Texas cities of Dallas, Houston and Austin. This investment will cost RioCan $138 million U.S., including $85.6 million U.S. of existing mortgages, which RioCan will assume. To put the price in context, RioCan earned $113.9 million (Canadian), or $0.49 a unit, in 2009. Like RioCan’s recent purchase of seven shopping centres in the northeastern U.S., grocery stores and pharmacies are the anchor tenants of these malls. That cuts the risk of this investment....
TIM HORTONS INC. $34 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 175.0 million; Market cap: $6.0 billion; Price-to-sales ratio: 2.7; Dividend yield: 1.5%; SI Rating: Average) has sold $200 million of seven-year notes. After commissions paid to underwriters, the company received $199.2 million. These new notes increased Tim Hortons’ total debt to around $611 million. Despite the increase, that’s still just 10% of its market cap. The company owns its main bakery through a joint venture with Swiss-based Aryzta AG. It is now negotiating to either sell its stake in this business to Aryzta, or buy out its partner. The cash from these new notes will help pay for this buyout, or help Tim Hortons build a new bakery....