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
Three new wireless providers (Globalive, DAVE Wireless and Public Mobile) will probably enter the Canadian market next year. This will undoubtedly put pressure on Canada’s three existing wireless carriers, including Telus. However, Telus has dealt with strong competition from wireless and cable companies for years. For example, last year it launched Koodo, a new discount cellphone service, to attract younger users. The company has also upgraded its networks to handle a wider variety of cellphones, including Apple’s hugely popular iPhone. New TV services should also help Telus hang on to many of its traditional phone and wireless customers. Moreover, Telus’s high dividend yield should attract more investors as income trusts convert to corporations, or cut their distributions once Ottawa starts taxing them in 2011....
TRANSALTA CORP. $22 (Toronto symbol TA; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 197.9 million; Market cap: $4.4 billion; Price-to-sales ratio: 1.5; SI Rating: Average) will pay roughly $755 million for Canadian Hydro Developers Inc. (Toronto symbol KHD), which owns and operates 21 power-generating facilities in Alberta, B.C., Ontario and Quebec. These include 12 hydroelectric plants, eight wind farms and one biomass plant, which generates power by burning plant materials and wood waste from lumber mills. TransAlta will also assume Canadian Hydro’s debt of $845 million. Adding Canadian Hydro will increase TransAlta’s generating capacity by 9%, to 8,657 megawatts. Moreover, about 22% of that total would come from renewable sources, compared to 15% today. TransAlta uses coal to generate 60% of its electricity, so increasing its renewable-energy capacity will help it comply with the tougher environmental regulations that will likely come into force over the next few years....
These four resource stocks are more risky than, say, Imperial Oil or EnCana. Still, we feel that their large reserves and low-cost operations put them in a good position to take advantage of rising demand for commodities as the global economy recovers. However, only three are buys right now. POTASH CORP. OF SASKATCHEWAN $96 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 295.6 million; Market cap: $28.4 billion; Price-to-sales ratio: 3.6; SI Rating: Average) is the world’s largest fertilizer producer. The company operates six potash mines in Saskatchewan and one in New Brunswick. The reserves of five of these mines should last between 60 and 97 years. The other two mines have minimal or undetermined reserves. The stock hit an all-time high of $246 in June 2008, but fell to $62 last December. The drop was caused by lower prices for crops, which hurt demand for fertilizers like potash. As well, farmers in North America and Australia are seeing better-than-expected crop yields this year, even though they applied less fertilizer. This is mainly because of good weather and large amounts of residual fertilizer in the soil from last year....
TECK RESOURCES LTD. $30 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 487.1 million; Market cap: $14.6 billion; Price-to-sales ratio: 1.9; SI Rating: Extra Risk) has agreed to sell two of its gold mines in Turkey to Alamos Gold Inc. (Toronto symbol AGI). Teck owns 60% of these mines; Fronteer Development Group Inc. (Toronto symbol FRG) owns the other 40%. Alamos will pay $40 million U.S., plus four million of its shares to Teck and Fronteer. Teck’s share of the cash is $24 million U.S. It will also get $21.9 million worth of Alamos shares, using the current share price. Teck will apply the cash to its $9-billion debt. Teck Resources is a buy.
SUNCOR ENERGY INC. $37 (Toronto symbol SU; Conservative Growth Portfolio, Resources sector; Shares outstanding: 1.6 billion; Market cap: $59.2 billion; Price-to-sales ratio: 1.1; SI Rating: Average) plans to double ethanol production at its plant in Sarnia, Ontario. Ethanol, which is made from corn, is a gasoline additive that cuts harmful emissions. Increasing ethanol production will help Suncor comply with proposed new environmental regulations. This project should be completed by the end of 2010, and will cost $120 million. To put this in context, Suncor earned $185 million, or $0.20 a share, in the second quarter of 2009 (excluding unusual items and last August’s merger with Petro-Canada). Suncor is a buy.
TransCanada and Canadian Utilities are both working on major new projects. Despite the huge size of these undertakings, their overall risk is low. That’s because government regulators will let the companies pass along most of the costs to their customers in the form of higher rates. This should let both firms keep paying their current dividends, or raise them. ATCO owns a majority interest in Canadian Utilities, so it also stands to profit from these projects. As well, Finning should benefit by selling construction equipment and repair services to TransCanada and Canadian Utilities....
ATCO LTD. (Toronto symbols ACO.X [class I non-voting] $43 and ACO.Y [class II voting] $43; Shares outstanding: 57.9 million; Market cap: $2.5 billion; Price-to-sales ratio: 0.7; SI Rating: Above Average) is a Calgary-based holding company. ATCO’s main subsidiary is 52.3%-owned Canadian Utilities Ltd.. As a result of a recent reorganization, Canadian Utilities operates most of ATCO’s main utility and energy businesses....
FINNING INTERNATIONAL INC. $16 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 170.6 million; Market cap: $2.7 billion; Price-to-sales ratio: 0.5; SI Rating: Above Average) sells, rents and repairs heavy equipment made by Caterpillar Inc. This includes tractors, bulldozers and trucks. Finning’s major customers are mainly in the western Canadian mining, forest products and construction industries. The recession has driven down the prices of oil and metals. In response, many of Finning’s customers have cut or put off spending on new equipment. As well, some are conserving cash by delaying routine repairs and maintenance. Finning gets 40% of its revenue from services like these. In the three months ended June 30, 2009, Finning’s revenue fell 23.9%, to $1.2 billion from $1.5 billion a year earlier. Earnings dropped 28.9%, to $47.8 million, or $0.28 a share, from $67.2 million, or $0.39 a share....
ROYAL BANK OF CANADA $56 (Toronto symbol RY; Conservative Growth Portfolio; Finance sector; Shares outstanding: 1.4 billion; Market cap: $78.4 billion; Price-to-sales ratio: 2.1; SI Rating: Above Average) will buy the third party registered investment advisor servicing business of U.S. banking firm J.P. Morgan & Co. (New York symbol JPM). The deal should close in the second quarter of 2010. This business provides custody and clearing services to brokers and investment managers. It will strengthen Royal’s wealth-management operations in the U.S., which account for roughly 7% of the bank’s total revenue. Royal Bank is a buy....
GENNUM CORP. $4.07 (Toronto symbol GND; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.4 million; Market cap: $144.1 million; Price-to-sales ratio: 1.3; SI Rating: Average) makes chips and other electronic equipment that let television broadcasters store, edit and transfer video signals without losing picture quality. Many TV broadcasters are putting off buying new equipment due to lower advertising revenue. As a result, Gennum’s sales fell 36.1% in its third quarter, which ended August 31, 2009, to $21.4 million from $33.5 million. (Gennum reports its results in U.S. dollars, but its share price and market cap are in Canadian dollars). In response to the falling sales, Gennum recently announced plans to cut 10% of its workforce by the end of this year. Because of a related $5.5-million charge for severance and other costs, Gennum lost $4.3 million, or $0.12 a share, in the latest quarter. The company did not reveal how much these moves would save it, but it did say that they would improve this year’s profitability and cash flow. It earned $6.4 million, or $0.18 a share, a year earlier....