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
SHAWCOR LTD. $26 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 70.6 million; Market cap: $1.8 billion; Price-to-sales ratio: 1.6; Dividend yield: 1.2%; SI Rating: Average) earned $0.14 a share in the three months ended March 31, 2010. That’s down 68.9% from $0.45 a year earlier. Revenue fell 27.0%, to $224.6 million from $307.5 million, due to a slowdown at its pipeline-coating division. As well, ShawCor’s overseas operations supply 60% of its revenue, and the higher Canadian dollar hurt their contribution. However, ShawCor will begin work on three major projects later this year. These contracts are worth a total of $320 million U.S. That’s why it raised its quarterly dividend by 7.1%, to $0.075 a share from $0.07. The new annual rate of $0.30 yields 1.2%. ShawCor is a buy.
MANITOBA TELECOM SERVICES INC. $29 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 64.7 million; Market cap: $1.9 billion; Price-to-sales ratio: 1.0; Dividend yield: 9.0%; SI Rating: Average) has dropped nearly 20% in the past five months. That’s mainly because of fears that slowing sales of traditional telephone services will force it to cut its quarterly dividend of $0.65 a share, for an annual yield of 9.0%. In 2009, Manitoba Telecom paid $168.1 million of dividends, but its free cash flow (cash flow minus capital expenditures) was just $86.2 million. That meant it had to borrow money to pay the dividend. However, the company has recently made a number of upgrades to its wireless and high-speed Internet networks. These moves should help Manitoba Telecom increase its cash flow as the economy recovers. Moreover, a new dividend reinvestment plan should help conserve cash. Manitoba Telecom is a buy.
One part of our three-pronged investing program is to spread your money out across the five main sectors of the economy: Manufacturing & Industry; Resources; Consumer; Finance; and Utilities. (The other two parts are to hold mostly high-quality, dividend paying stocks, and downplay stocks in the broker/public-relations limelight.) The proper proportions depend on your circumstances and risk tolerance. In general, stocks in the Resources and Manufacturing & Industry sectors expose you to above-average volatility, and stocks in the Utilities and Finance sectors entail below-average volatility. Consumer stocks usually fall in the middle. That’s because consumer firms benefit from continuous and often habitual use of their products and services, so they have much more stability in their sales and earnings, no matter what the overall economy is doing. Of course, this depends on an individual company’s situation and other factors....
PRECISION DRILLING TRUST $7.13 (Toronto symbol PD.UN; Aggressive Growth Portfolio, Resource sector; Units outstanding: 275.6 million; Market cap: $2.0 billion; Price-to-sales ratio: 1.5; No dividends paid since February 2009; SI Rating: Extra Risk) provides contract-drilling services to oil and gas producers. Precision owns 351 drilling rigs, including 202 in Canada, 146 in the U.S. and three in Mexico and other countries. Precision operated an average of 193 rigs in the three months ended March 31, 2010, up 15.6% from 167 a year earlier. That’s mainly because improving oil prices have driven up drilling activity. However, the trust negotiated new rates with some of its customers before the winter drilling season started, so it was unable to take full advantage of the higher demand. As a result, its revenue fell 16.8% in the quarter, to $373.1 million from $448.4 million....
PENGROWTH ENERGY TRUST $11 (Toronto symbol PGF.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 290.8 million; Market cap: $3.2 billion; Price-to-sales ratio: 2.2; Dividend yield: 7.6%; SI Rating: Average) plans to convert to a corporation before the end of 2010. However, the trust has $2.8 billion of tax credits it can use to offset the income taxes it will have to pay starting January 1, 2011. As a result, Pengrowth plans to maintain its annual payout of $0.84 a unit for several years. In the three months ended March 31, 2010, Pengrowth’s daily production fell 5.8%, to 6,806 barrels of oil equivalent (which includes natural gas) from 7,226 barrels a year earlier. However, its selling price per barrel rose 17.8%, to $52.49 from $44.57. As a result, Pengrowth earned $0.37 a unit in the latest quarter. That’s a big improvement over the $0.21 a unit it lost a year earlier. Cash flow per unit rose 37.8%, to $0.51 from $0.37....
BANK OF MONTREAL $62 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 557.3 million; Market cap: $34.6 billion; Price-to-sales ratio: 2.2; Dividend yield: 4.5%; SI Rating: Above Average) has purchased AMCORE Bank N.A., which is insolvent. AMCORE has 52 branches in northern Illinois and southern Wisconsin. Bank of Montreal will convert these outlets to its Harris Bank banner; Chicago-based Harris is Bank of Montreal’s main U.S. subsidiary. AMCORE has $2.5 billion U.S. of assets, including $2.0 billion U.S. of loans. As of January 31, 2010, Bank of Montreal had $394 billion of assets. The bank did not say how much it paid for these branches. However, in light of AMCORE’s problems, Bank of Montreal likely got a bargain. As well, U.S. banking regulators will cover 80% of AMCORE’s loan losses. That cuts the risk of this purchase....
FORTIS INC. $28 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 172.2 million; Market cap: $4.8 billion; Price-to-sales ratio: 1.3; Dividend yield: 4.0%; SI Rating: Above Average) saw its revenue fall 10.5% in the three months ended March 31, 2010, to $1.1 billion from $1.2 billion a year earlier. That’s mainly because warmer-than-normal weather hurt sales at its Terasen natural-gas distribution subsidiary. However, Fortis’s earnings still rose 8.7%, to $100 million from $92 million a year earlier. Earnings per share rose 7.7%, to $0.56 from $0.52, on more shares outstanding. Recent regulatory decisions let Terasen keep more of its revenue; that was the main reason for the higher earnings. Regulators also let Fortis’s Canadian regulated-power utilities raise their rates. These gains offset lower contributions from the company’s unregulated utilities and holdings in the Caribbean....
RIOCAN REAL ESTATE INVESTMENT TRUST $20 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 243.2 million; Market cap: $4.9 billion; Price-to-sales ratio: 6.2; Dividend yield: 6.9%; SI Rating: Average) is Canada’s largest real estate investment trust (REIT). RioCan has properties in all 10 provinces. The trust specializes in large outdoor malls, and owns 261 retail properties, 12 of which are under development. Most are in suburban areas, where land is generally cheaper than in towns and cities. Since it became a REIT in the early 1990s, RioCan has focused on developing and leasing retail space in Canada. However, it recently expanded to the U.S. through a new joint venture with Cedar Shopping Centers, Inc. (New York symbol CDR). RioCan paid $181 million U.S. for 80% of this joint venture, which will own seven shopping centres in the northeastern U.S. RioCan also received 14.3% of Cedar as part of the deal.
More U.S. purchases seem likely
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MOLSON COORS CANADA INC. $43 is paying $40 million for 51% of a new joint venture with Chinese brewer Hebei Si’hai Beer Company (all amounts except share price in U.S. dollars). This will help Molson Coors make its Coors Light beer more available in China....
CGI GROUP INC., $14.90, Toronto symbol GIB.A, has agreed to buy Stanley Inc. (New York symbol SXE). Founded in 1966 by U.S. Navy Rear Admiral Emory Stanley, Stanley Inc. provides computer-outsourcing services, mainly to military and civilian agencies of the U.S. government. CGI aims to close the deal later this year. CGI is paying roughly $1.07 billion U.S. for Stanley. That’s equal to 26% of CGI’s $4.3-billion (Canadian) market cap. On March 31, 2010, CGI held cash of $419.1 million, or $1.47 a share, so it will need additional funds to complete this purchase. However, its long-term debt of $274.5 million is a low 6% of its market cap, so it can comfortably afford to borrow most of the price. Adding Stanley will diversify CGI’s U.S. operations. Following the purchase, defense and intelligence customers will represent 55% of its customer base, while the remaining 45% will come from civilian customers. CGI will also gain access to Stanley’s high-quality clientele, which should give it high-potential cross-selling opportunities....