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
MANITOBA TELECOM SERVICES INC. $34 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 64.7 million; Market cap: $2.2 billion; Price-to-sales ratio: 1.1; SI Rating: Average) is the main provider of telecommunication services in Manitoba. It has over 1.2 million regular telephone customers, plus 438,300 wireless users.
Looking beyond Manitoba for growth
To cut its reliance on Manitoba, the company bought Allstream Inc. for $1.7 billion in cash and stock in June 2004. Allstream sells custom-designed packages of telephone, Internet and other communications services to businesses across Canada. It accounted for 57% of Manitoba Telecom’s 2008 revenue, but just 37% of its profits....
HOME CAPITAL GROUP INC. $28 has adopted a shareholders’ rights plan, or “poison pill.” These plans let existing shareholders buy new shares at a discount if a hostile bidder acquires more than 20% of the outstanding shares. The extra shares would then drive up the cost to a potential buyer. While these plans sometimes protect management more than investors, we feel that the company’s strong prospects offset this risk. Home Capital has also increased its quarterly dividend by 7.7%, to $0.14 from $0.13. The new annual rate of $0.56 yields 2.0%. Best Buy. HART STORES INC. $1.30 will conserve cash for expansion by suspending its annual dividend payments. It last paid $0.10 a share on July 10, 2008. Hart currently operates 90 mid-sized department stores in eastern Canada, and plans to open a new store in Ontario later this year. The company focuses on smaller cities that big retail chains tend to avoid, which cuts its risk. Hold. SHAWCOR LTD. $20 has won a $50-million contract to provide coatings for Enbridge’s Alberta Clipper pipeline, which will pump crude oil from Alberta to Wisconsin. The company has also won contracts totalling $50 million related to pipeline projects in Europe. These deals are equal to 7% of ShawCor’s annual revenue of $1.4 billion. Buy....
TECK RESOURCES LTD., $19.99, Toronto symbol TCK.B, will sell 101.3 million class B subordinate-voting shares (one vote per share) at $17.21 each to China Investment Corp., a sovereign wealth fund controlled by the Chinese government. Teck is selling these shares for 13.9% below the current market price. That’s because China Investment agreed to certain conditions, including holding onto these shares for at least a year and not selling them to one of Teck’s main rivals or customers. Despite the discount, Teck’s shares rose 8% on the news. That’s because Teck will put the $1.7 billion proceeds from the sale toward the $9.8-billion U.S. it borrowed to finance its $13.6-billion (Canadian) purchase of Fording Canadian Coal Trust last October....
POTASH CORP. OF SASKATCHEWAN, $107.66, Toronto symbol POT, fell slightly on Friday after it lowered its second-quarter earnings forecast. Potash now expects to report earnings of $0.70 a share (all amounts except share price in U.S. dollars). That’s 46.2% below the midpoint of its earlier range of $1.10 to $1.50. Lower prices for crops, such as corn and wheat, continue to dampen fertilizer demand and prices. Plus, sales have been hurt by unusually dry conditions in the Canadian prairies and cool, wet weather in the U.S. Potash Corp. and other fertilizer makers, such as Agrium (see below), have cut their production in an effort to lower global inventories and push up prices. However, it will probably take several months before demand starts rising again....
TRANSCANADA CORP., $31.49, Toronto symbol TRP, will buy the 20.01% of the Keystone pipeline that it doesn’t already own from its partner, ConocoPhillips (New York symbol COP), for $550 million U.S. Keystone will pump crude oil from Alberta to refineries in Illinois. The first phase should start operating early next year. TransCanada plans to extend Keystone to the U.S. Gulf Coast by 2012. Aside from the purchase price, TransCanada will assume $200 million U.S. in related short-term debt. In all, Keystone will cost $12 billion U.S. to build. TransCanada and ConocoPhillips have spent $2.7 billion U.S. to date. To put these figures in context, TransCanada’s market cap is $19.4 billion (Canadian)....
MDS INC., $5.72, Toronto symbol MDS, is a life-sciences company that conducts contract-drug research for pharmaceutical companies, sells analytical devices (which scientists use to detect diseases) and supplies medical isotopes for cancer research. The company lost $17 million, or $0.15 a share, in the three months ended April 30, 2009 (all amounts except share price in U.S. dollars). The loss included a $16-million writedown of buildings and equipment at its drug-testing division. In the year-earlier quarter, MDS earned $13 million, or $0.11 a share. If you disregard the writedown and several other unusual charges, earnings per share fell 62.5%, to $0.03 from $0.08. That was well below the $0.06 a share that analysts were expecting. Revenue fell 19.4%, to $282 million from $350 million. Still, this was higher than the consensus estimate of $274.4 million. If you exclude the impact of foreign-exchange rates and the businesses that MDS bought and sold, its revenue fell 10%....
I am pleased to announce the launch of our new web site, TSI Network (www.tsinetwork.ca). Building on our four newsletters (Canadian Wealth Advisor, Stock Pickers Digest, The Successful Investor and Wall Street Stock Forecaster), the site contains archives of over 2,000 articles on individual investments. I’m the host of TSI Network. Every day, Monday to Friday, I post free updates on issues that matter to you — the individual investor. Visitors may also participate in daily polls, get access to my ongoing Twitter updates, and much more. In addition, subscribers to the site get my latest report, “How to Trade Stocks and Make Good Investments in Canada” — free....
Oil prices are rising again, but it’s unlikely they will soon match or exceed the record highs they hit in 2008. Over the long-term, we feel the best way for conservative investors to profit from volatile energy prices is with integrated oil producers like Imperial Oil. If oil prices rise, it earns more from crude production. But if oil prices fall, Imperial’s refining and marketing operations, which need crude oil to make gasoline and other fuels, will become more profitable. IMPERIAL OIL LTD. $46 (Toronto symbol IMO; Conservative Growth Portfolio, Resources sector; Shares outstanding: 848.9 million; Market cap: $39 billion; Price-to-sales ratio: 1.3; SI Rating: Average) is Canada’s largest integrated oil company. Imperial accounts for about 6% of Canada’s total oil production. U.S.-based ExxonMobil Corp. (New York symbol XOM) owns 69.6% of Imperial’s shares. Imperial gets most of its revenue from its “downstream” businesses. These consist of its four refineries and 1,900 retail gas stations, which operate under the “Esso” banner. Downstream operations accounted for 77% of Imperial’s 2008 revenue, but just 21% of its earnings....
SNC-LAVALIN GROUP INC. $43 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151 million; Market cap: $6.5 billion; Price-to-sales ratio: 1.0; SI Rating: Average) recently bought Newfoundland-based Spectrol Energy Services Inc. for an undisclosed sum. Spectrol sells engineering and technical services to oil and natural-gas producers off Canada’s east coast. SNC hopes the acquisition will let it take advantage of the recent jump in oil prices. However, 60% of SNC’s earnings already come from customers in the resource sector, and commodity prices are still well below last year’s peaks. As well, tight credit markets could make it difficult for these clients to borrow cash for new projects. SNC-Lavalin is a hold.
CGI GROUP INC. $10 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 308.6 million; Market cap: $3.1 billion; Price-to-sales ratio: 0.8; SI Rating: Extra Risk) sells computer systems and specialized software that help businesses automate routine transactions. This allows CGI’s clients, which include Bank of Montreal and AT&T, to focus on their main operations. Many of its customers sign long-term contracts. This gives CGI strong recurring revenue. In its second fiscal quarter, which ended March 31, 2009, CGI’s revenue rose 1.9%, to $948.3 million from $930.8 million a year earlier. The United States accounts for over 40% of CGI’s revenue, so it benefits from a falling Canadian dollar: A 7.5% gain from currency-exchange rates helped offset a 5.6% drop in contract revenue. Earnings rose 10.4%, to $76.3 million from $69.1 million. Earnings per share rose 19.1%, to $0.25 from $0.21, on fewer shares outstanding. CGI’s $12-billion order backlog is equal to 3.2 times its annual revenue....