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
ANDREW PELLER LTD. $7.90 (Toronto symbol ADW.A; Income Portfolio, Consumer sector; Shares outstanding: 14.9 million; Market cap: $117.7 million; Price-to-sales ratio: 0.4; SI Rating: Above Average) reported that its sales in its first fiscal quarter, which ended June 30, 2009, rose 13.8%, to $70.2 million from $61.6 million a year earlier....
The dividend yield of the S&P/TSX Composite Index is now around 3%, up from 1% in the early part of this decade. This rise is partly because more companies are using their excess cash for dividends instead of buying back shares. This new focus on dividends is a good thing for investors. Dividends can contribute up to a third of an investor’s long-term returns, without even considering the effects of the dividend tax credit. As well, dividends are more dependable than capital gains as a source of investment income. Moreover, growing dividends help shield you from inflation. The recession has forced many companies to cut their dividends in order to conserve cash. The response is usually a big drop in the stock price....
AGRIUM INC. $53 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 157 million; Market cap: $8.3 billion; Price-to-sales ratio: 0.7; SI Rating: Average) earned $370 million, or $2.35 a share, in the three months ended June 30, 2009 (all amounts except share price and market cap in U.S. dollars). Low fertilizer prices have forced Agrium to write down some of its inventories. If you exclude all unusual items, the company would have earned $387 million, or $2.43 a share. That’s 39.2% less than the $636 million, or $4.00 a share, that Agrium earned a year earlier. Sales rose 5.7%, to $4.1 billion from $3.9 billion, mainly because Agrium bought U.S.-based farm-products retailer UAP Holding Corp. in May 2008, and this business is making a larger contribution to its results. Poor weather conditions have hurt fertilizer demand. Farmers have also had problems getting credit during the recession. As a result, many have put off buying fertilizer and other supplies. These factors have contributed to lower fertilizer prices, particularly for potash. However, demand for other products, such as seeds and crop-protection chemicals, is rising. Agrium is still a hold.
LOBLAW COMPANIES LTD. $33 (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 274.2 million; Market cap: $9 billion; Price-to-sales ratio: 0.3; SI Rating: Above Average) is Canada’s largest supermarket operator, with over 1,000 stores. The company’s major banners include Loblaws, Real Canadian Superstore, Provigo and Zehrs. Franchisees operate about 40% of its stores. Loblaw ran into trouble earlier this decade when it expanded into non-food merchandise as part of a plan to compete with bigger retailers like Wal-Mart. However, supply problems led to shortages of basic food items at Loblaw’s stores.
Strong sales, but erratic earnings
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IMPERIAL OIL LTD. $40 earned $0.25 a share in the three months ended June 30, 2009. That’s down 80.5% from $1.28 a year earlier. The drop was mainly caused by falling crude-oil and natural-gas prices. As well, its Cold Lake and 25%-owned Syncrude oil-sands projects were closed for maintenance during...
BCE INC., $25.46, Toronto symbol BCE, continues to lower its costs in the face of tough competition for new phone customers. Its current restructuring plan, which includes cutting jobs, relocating employees and selling surplus real estate, should save the company $400 million a year, starting in 2010. In the three months ended June 30, 2009, BCE’s earnings rose 5.2%, to $447 million from $425 million a year earlier. Per-share earnings rose 9.4%, to $0.58 from $0.53, on fewer outstanding shares. These figures exclude costs related to the company’s restructuring and other unusual items. Revenue fell 2.1%, to $4.3 billion from $4.4 billion. The company continues to lose residential phone customers to cable companies and wireless providers, but these losses are slowing. As well, the recession is weighing on BCE’s wireless operations, which signed up 45,000 new customers during the quarter, compared to 83,000 a year earlier. Revenue per wireless user also fell by 4%. However, revenue from BCE’s satellite-TV services gained 9.3%, and high-speed Internet revenue rose 2.8%....
CANADIAN PACIFIC RAILWAY LTD., $47.90, Toronto symbol CP, reported higher profits for its latest quarter, as a gain on the sale of an investment helped it overcome a 24% drop in freight volumes caused by the recession. In the three months ended June 30, 2009, CP’s earnings rose 1.7%, to $157.3 million from $154.7 million a year earlier. Earnings per share fell 7.0%, to $0.93 from $1.00, on more outstanding shares. (In February, CP sold 13.9 million shares at $36.75 each. That increased the total outstanding by about 9%). The latest earnings included a $68.7-million gain on CP’s sale of part of its stake in the Detroit River Tunnel Partnership, which operates a rail tunnel between Detroit and Windsor, Ontario. CP now owns 16.5% of this business, down from 50%. The sale freed up cash that CP used to pay down debt, while preserving its right to keep operating the tunnel. CP’s $4-billion long-term debt is now a manageable 49% of its $8.2 billion market cap....
TRANSALTA CORP., $20.85, Toronto symbol TA, has launched a hostile takeover bid for 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. TransAlta is offering $4.55 a share in cash for Canadian Hydro, 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....
POTASH CORP. OF SASKATCHEWAN, $101.95, Toronto symbol POT, moved up 4% on speculation that Brazilian mining company Vale SA is preparing to launch a takeover offer for U.S.-based potash producer Mosaic Co. (New York symbol MOS). Potash Corp. is down from last July’s high of $227 due to falling potash prices and demand. However, Vale’s potential interest in Mosaic has spurred the stock prices of most fertilizer producers, including Agrium (see below). The Vale-Mosaic speculation also helped Potash Corp. overcome a drop earlier in the week on news that Russian potash producer Silvinit agreed to sell potash to Indian Potash Ltd. for $460 a tonne (all amounts except share price in U.S. dollars). Indian Potash imports and distributes about 70% of India’s potash needs. The $460 price is a lot less than the $700 that Canpotex will receive from its recent contracts to sell potash to buyers in Japan, South Korea and Taiwan. Canpotex is a potash marketing and exporting firm that is jointly owned by Potash Corp., Agrium and Mosaic. Still, Silvinit’s price is far above potash’s average 2003-2008 price of $270 a tonne....
MDS INC., $6.10, Toronto symbol MDS, continues to lose $4 million a month because of the shutdown of the 52-year-old Chalk River reactor near Ottawa (all amounts except share price in U.S. dollars). To put this in context, MDS lost $17 million, or $0.15 a share, in the three months ended April 30, 2009. The loss included a $16-million writedown of buildings and equipment at MDS’s drug-testing division. Last May, a water leak prompted Atomic Energy of Canada Ltd., which operates the reactor, to shut it down. MDS gets all of its medical isotopes from Chalk River. Medical labs use these isotopes to detect and treat cancer and other diseases. Chalk River will probably remain out of service for the rest of this year. In response, the company is working to find new supplies of isotopes from reactors in Europe and South Africa, which have increased production to fill the gap left by the closure of Chalk River. MDS is also negotiating with a Russian isotope supplier. However, this deal could take several months to finalize....