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
CGI GROUP INC., $15.04, Toronto symbol GIB.A, is Canada’s largest provider of computer-outsourcing services. These services help its customers automate certain routine functions, such as accounting and buying supplies. That lets CGI’s clients focus on their main businesses, and improve their efficiency. The company continues to renew existing contracts and win new ones. CGI added $1.1 billion of new orders in its second quarter, which ended March 31, 2010. Its backlog is now $11.4 billion, or 3.1 times its annual revenue. Even with the jump in new orders, CGI’s revenue fell 4.0% in the latest quarter, to $910.4 million from $948.3 million a year earlier. CGI gets roughly 40% of its revenue from outside of Canada, mainly the U.S., so the higher Canadian dollar hurt its revenue. Without the negative impact of exchange rates, revenue would have risen 3.5%....
TECK RESOURCES LTD., $43.77, Toronto symbol TCK.B, earned a record $908 million in the three months ended March 31, 2010. That’s up 276.8% from $241 million a year earlier. Earnings per share rose 206.0%, to $1.53 from $0.50, on more shares outstanding. One-time items, including the sale of two gold mines in Turkey and a one-third interest in a B.C. hydroelectric dam, boosted the company’s earnings in the latest quarter. Without one-time items, Teck’s earnings would have fallen 4.2%, to $205 million from $214 million. Teck’s cash flow per share fell 42.5%, to $0.70 from $1.22. However, its revenue rose 13.8%, to $1.9 billion from $1.7 billion, largely because of rising copper prices....
CENOVUS ENERGY INC., $29.16, Toronto symbol CVE, took its present form on December 1, 2009. That’s when EnCana Corp. split itself into two separate companies. One kept the EnCana name and “ECA” trading symbol, and focuses on unconventional natural gas. The other, Cenovus, specializes in oil-sands projects, oil refineries and conventional natural gas. Cenovus rose 2% this week. The gain was mainly in response to a big purchase in the Alberta oil patch: Chinese state-owned oil company Sinopec bought a 9.03% stake in the massive Syncrude oil-sands project for $4.65 billion U.S. The purchase price was roughly 20% higher than the consensus estimate. That helped draw investor attention to all oil-sands stocks, including Cenovus....
Canadian Tire is an example of what you might call a cyclical growth stock. It’s cyclical because its sales generally rise and fall with the economy. But it also has a growth element. Thanks to an aggressive store-renovation plan, its overall sales rose 70% in the past 10 years, even though it operates just 10% more stores. It has also spurred growth by expanding into new businesses, such as clothing, specialized auto parts and financial services. The company now aims to build on this success with a new strategy: It will fuel its long-term growth by focusing on its core products, particularly auto-related parts and services. Canadian Tire feels these moves will increase its annual sales by 3% to 5%, and its annual earnings by 8% to 10%. CANADIAN TIRE CORP. $56 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.6 million; Market cap: $4.6 billion; Price-to-sales ratio: 0.5; Dividend yield: 1.5%; SI Rating: Above Average) sells automotive, household and sporting goods through 479 stores. These account for roughly 65% of its revenue, and 55% of its earnings. Canadian Tire owns 70% of its stores, but franchisees operate all of them....
TORSTAR CORP. $11 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 79.0 million; Market cap: $869.0 million; Price-to-sales ratio: 0.6; Dividend yield: 3.4%; SI Rating: Above Average) at one time was, like Canadian Tire, a good example of a cyclical growth stock. For decades, ad revenue from The Toronto Star rose and fell with the economic cycle, but generally moved upward. Today, however, some investors feel Torstar is in a long-term or “secular” decline, due to growing competition from free or low-cost news and ads on the Internet. However, the company’s online businesses have offset some of the lost ad revenue at the print division. In January 2010, The Toronto Star’s web site (thestar.com) attracted 37% more unique visitors than in January 2009....
Utility stocks have more appeal than they used to, mainly because low interest rates have made bonds less appealing. (See later in this issue for our full analysis of why utilities are a better choice than bonds for your portfolio.) We see all five of these electrical-power utilities as buys. That’s because they offer an attractive mix of safety, income and growth. As well, they have maintained or raised their dividends, despite the recession and stock-market downturn. CANADIAN UTILITIES LTD. (Toronto symbols CU (class A non-voting) $47 and CU.X (class B voting) $47; Income Portfolio, Utilities sector; Shares outstanding: 125.9 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 19 power plants: 15 in Canada, two in the U.K., and two in Australia, As well, Canadian Utilities sells engineering services to other utilities. ATCO Ltd. (see right) owns 52.3% of the company....
INDIGO BOOKS & MUSIC INC. $18 (Toronto symbol IDG; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 24.5 million; Market cap: $441.0 million; Price-to-sales ratio: 0.5; Dividend yield: 2.2%; SI Rating: Average) will face stronger competition from online bookseller Amazon.com now that the federal government will let Amazon build a warehouse in Canada. This warehouse will lower Amazon’s distribution costs, and let it cut the prices of the books it sells though its Canadian web site. However, Indigo’s inventory and distribution costs have also fallen. That’s because it recently upgraded its computer systems. These savings should help it match any price cuts by Amazon. As well, its new Kobo e-book reader is cheaper than Amazon’s Kindle. Indigo is a buy.
BCE INC. $30 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 767.2 million; Market cap: $23.0 billion; Price-to-sales ratio: 1.3; Dividend yield: 5.8%; SI Rating: Above Average) is buying back 20 million, or about 3%, of its outstanding shares this year. Share buybacks raise earnings per share and other per-share calculations. Buybacks like this typically occur in small amounts over a year. However, BCE recently bought four million shares at market prices from a private seller, instead of through a stock exchange. It will count these shares toward its target of 20 million. BCE is a buy.
Many investors buy bonds to make their portfolios less volatile. But high-quality utility stocks, like the five we analyze in this issue, have several advantages over bonds. One advantage of utility stocks is that there is no set limit to the returns they provide. That can help protect you from inflation. Bonds can’t provide this protection, because they’re fixed-return investments. Utility stocks also come with big tax advantages. You get a tax credit on dividends from Canadian companies. That cuts your tax payable by about a third, compared to interest income. You only pay taxes on capital gains when you sell. Moreover, you only pay tax on half of your capital gains....
MOLSON COORS CANADA INC. (Toronto symbols TPX.A $45 and TPX.B $45; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 185.5 million; Market cap: $8.3 billion; Price-to-sales ratio: 2.7; Dividend yield: 2.1%; SI Rating: Average) is the world’s fifth-largest brewer by volume. Its top brands include Coors Light, Molson Canadian and Carling. The company gets 49% of its gross profit from Canada, followed by the U.S. (41%) and the U.K. (10%). In February 2005, Canadian brewer Molson Inc. merged with U.S.-based Adolph Coors Co. The cost savings from the merger continue to help the company compete with large international brewers....