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
TRANSALTA CORP., $22.73, Toronto symbol TA, received approval from competition regulators this week for its proposed takeover of Canadian Hydro Developers Inc. (Toronto symbol KHD). Canadian Hydro 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. Last month, TransAlta launched a hostile takeover bid for Canadian Hydro. The offer is worth $4.55 a share, for a total of $654 million. (That’s equal to 79% of TransAlta’s 2008 cash flow of $828 million, or $4.16 a share.) Buying Canadian Hydro would lower TransAlta’s reliance on power from non-renewable sources, such as coal and natural gas. It would also help TransAlta comply with the tougher new environmental regulations that will likely come into effect over the next few years. So far, Canadian Hydro has resisted the bid, and is looking for a new buyer....
CANADIAN TIRE CORP., $59.20, Toronto symbol CTC.A, reported quarterly profits that were higher than the year-earlier period, despite lower sales. Cooler-than-normal weather in Ontario and Quebec hurt demand for seasonal goods, such as barbecues and patio furniture. But sales of home-improvement products, like paint, were stronger. In the three months ended July 4, 2009, the retailer’s earnings per share rose 8.6%, to $1.26 from $1.16 a year earlier. These figures exclude unusual items, like gains and losses on asset sales. On this basis, the latest earnings were much better than the $1.02 a share that analysts were expecting. The higher earnings were mainly the result of Canadian Tire’s new inventory-management systems, which improved the productivity of its stores. Revenue fell 5.1%, to $2.3 billion from $2.45 billion a year earlier. Same-store sales at its main retail division (which includes Canadian Tire stores and the PartSource auto-parts chain) fell 2.7%. As well, lower gasoline prices caused a 21.4% revenue drop at Canadian Tire’s gas-station division, despite the fact that its sales volume rose by 1.3%....
Holding companies give investors the choice of buying the parent company or its publicly traded subsidiaries. In many cases, we like some subsidiaries but not others, so we prefer to invest in them directly and avoid the parent. Each situation is different, of course, and sometimes we recommend the parent over the subsidiaries. A good example is Maple Leaf Foods. Another is ATCO, the parent company of Canadian Utilities, which is a long-time recommendation of The Successful Investor. Like most holding companies, ATCO trades for less than the total value of its various pieces. This is known as a “holding-company discount.” Right now, you can buy a share of ATCO for $38, and get roughly $42 worth of Canadian Utilities. That means ATCO’s other businesses are essentially free....
MAPLE LEAF FOODS INC. $9.17 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 129.3 million; Market cap: $1.2 billion; Price-to-sales ratio: 0.2; SI Rating: Average) produces fresh and prepared beef and poultry under the Maple Leaf and Schneider brands. It also owns 89.8% of CANADA BREAD CO. LTD. $41 (Toronto symbol CBY; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 25.4 million; Market cap: $1.0 billion; Price-to-sales ratio: 0.6; SI Rating: Above Average), which is Canada’s second-largest producer of baked goods after Weston Bakery. At current prices, Maple Leaf’s stake in Canada Bread is worth roughly $7.25 per Maple Leaf share. That means you can buy Maple Leaf’s meat-processing operations, which account for 65% of its revenue, for just $1.90 a share....
CANADIAN UTILITIES LTD. (Toronto symbols CU (class A non-voting) $37 and CU.X (class B voting) $36; Income Portfolio, Utilities sector; Shares outstanding: 125.6 million; Market cap: $4.6 billion; Price-to-sales ratio: 1.7; SI Rating: Above Average) earned $73.5 million, or $0.59 a share, in the three months ended June 30, 2009....
These four financial companies tend to be more volatile than Canada’s big-five banks. But they are all leaders in their niche fields, and offer strong growth prospects, particularly as the economy begins to recover. We feel that conservative investors should diversify their finance-sector holdings with Great-West Lifeco and IGM Financial. More aggressive investors should consider Home Capital Group. However, we still see Dundee Corp. as a worthwhile hold. GREAT-WEST LIFECO INC. $25 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 944.3 million; Market cap: $23.6 billion; Price-to-sales ratio: 1.0; SI Rating: Above Average) is Canada’s largest insurance company, with $441.9 billion of assets under administration. Great-West also provides retirement-planning and wealth-management services. It gets about 60% of its earnings from Canada, followed by Europe (25%) and the United States (15%). Power Financial Corp. (Toronto symbol PWF) owns 68.7% of Great-West’s shares....
TIM HORTONS INC. $32 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 180.7 million; Market cap: $5.8 billion; Price-to-sales ratio: 2.7; SI Rating: Average) will start selling ice cream at six more of its Canadian coffee-and-donut stores following strong initial demand at six test outlets in southern Ontario....
PENGROWTH ENERGY TRUST $9.27 (Toronto symbol PGF.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 258.4 million; Market cap: $2.4 billion; Price-to-sales ratio: 1.0; SI Rating: Average) saw its cash flow per unit fall 48.1% in the three months ended June 30, 2009, to $0.56 from $1.08 a year earlier. Despite hedging gains, Pengrowth’s average realized selling price for its oil and gas fell by 39%. This was the main reason for the lower cash flow per unit. The trust’s monthly distribution of $0.10 a unit (for an annual yield of 12.9%) accounted for just 54% of its cash flow, so it seems safe for now. Pengrowth is a buy.
SHAWCOR LTD. $24 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 70.4 million; Market cap: $1.7 billion; Price-to-sales ratio: 1.2; SI Rating: Average) makes sealants and coatings that protect onshore and offshore oil and natural-gas pipelines from corrosion. This business supplies 90% of its revenue. The remaining 10% comes from making industrial equipment, such as electrical wire and protective sheaths. In the three months ended June 30, 2009, ShawCor’s revenue rose 6.0%, to $312.8 million from $295.1 million a year earlier. Overseas customers account for 75% of its revenue, so the company benefitted from a lower Canadian dollar. As well, it prices most of its contracts in U.S. dollars. As a result of these two factors, favourable foreign-exchange rates added $25.1 million to ShawCor’s revenue in the latest quarter. Earnings in the quarter jumped 92.7%, to $34.3 million, or $0.49 a share, from $17.8 million, or $0.25 a share, a year earlier. ShawCor has upgraded its plants over the past few years, and these improvements have lowered its operating costs. Falling prices for raw materials, such as plastic resins, steel and copper, have also helped ShawCor increase its earnings....
Fortis and Emera have used the steady cash flow from their power utilities in Atlantic Canada to fund new investments in other businesses. These have helped expand their operations beyond a single region, and enhanced their growth prospects. FORTIS INC. $25 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 170.3 million; Market cap: $4.3 billion; Price-to-sales ratio: 1.1; SI Rating: Above Average) gets just 15% of its revenue from Newfoundland Power, its original business. In the past few years, the company has bought electrical utilities in four other Canadian provinces, as well as the U.S. and Caribbean. However, about half of its revenue now comes from Terasen Inc., which distributes natural gas in British Columbia. The company paid $3.7 billion for Terasen in May 2007. In the three months ended June 30, 2009, Fortis’s earnings jumped 82.8%, to $53 million, or $0.31 a share, from $29 million, or $0.18 a share, a year earlier. If you exclude one-time charges in the year-earlier quarter, earnings would have risen 20.5%. Terasen contributed $14 million to the latest earnings. Revenue fell 11.1%, to $754 million from $848 million. The drop was largely because of warmer-than-usual spring weather, which hurt natural-gas demand at Terasen....