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
We continue to recommend that all investors own at least two of Canada’s big-five banks. But these should not be the extent of your financial holdings. Other types of financial investments, such as high-quality insurance companies, should play a role in your portfolio, as well. Here are four non-bank financial companies we like. All offer an attractive combination of growth and value. However, only three are buys right now. GREAT-WEST LIFECO INC. $16 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 943.9 million; Market cap: $15.1 billion; Price-to-sales ratio: 0.6; SI Rating: Above Average) is Canada’s largest insurance company. Great-West administers $339 billion worth of assets. The company also offers wealth-management services. It operates in Canada (55% of its earnings), Europe (35%) and the U.S. (10%). Power Corp. (Toronto symbol POW) owns 72.7% of Great-West’s shares....
BOMBARDIER INC., Toronto symbols BBD.A, $3.39, and BBD.B, $3.32, has received a firm order for 20 of its new CSeries regional jets from Lease Corporation International Aviation (New Buildings) Limited. Lease Corporation is an Irish company that leases aircraft to Singapore Airlines, British Airways and other major airlines. The deal is worth $1.4 billion, and Bombardier will probably begin delivering the planes in 2014. (All amounts except share price in U.S. dollars) Moreover, Lease Corporation has an option to buy 20 more jets, though it will probably wait until it has received most of the initial order before it exercises the option. To put this contract in perspective, Bombardier earned $1 billion, or $0.56 a share, in the fiscal year ended January 31, 2009. That’s more than twice the $479 million, or $0.26 a share, it earned the previous year. The year-earlier figures exclude the writedown of an investment....
PETRO-CANADA, $34.68, Toronto symbol PCA, jumped 17% this week after it accepted a friendly takeover offer from Suncor Energy Inc. ($29.36, Toronto symbol SU). (Suncor is not related to Philadelphia-based refiner Sunoco Inc., New York symbol SUN.) Under the terms of the deal, Petro-Canada shareholders will get 1.28 common shares of Suncor for each share they own, while Suncor investors will get one share of the new company for each Suncor share they own. Suncor shareholders will own 60% of the combined company, which will be Canada’s largest oil company in terms of market cap. Petro-Canada shareholders will own the remaining 40%. The combined company will operate under the Suncor name. However, the new company will keep using the Petro-Canada banner for its retail gas stations (Petro-Canada has 1,300 stations, while Suncor has roughly 300 that operate under the “Sunoco” banner). It will have proven oil reserves of 3.1 billion barrels, compared to 2.3 billion barrels for Imperial Oil (see below)....
GENNUM CORP., $3.65, Toronto symbol GND, has agreed to buy Ottawa-based Tundra Semiconductor Corp. (Toronto symbol TUN). Gennum makes equipment that lets TV broadcasters store, manipulate and transport video signals without losing picture quality. Like Tundra, it also makes chips and other components for computer-networking equipment, such as modems and routers. Gennum is paying $86 million in cash and shares for Tundra, 48% more than Tundra’s market cap just prior to the announcement. The cash portion of the purchase price is $55 million, while Gennum shares make up the other $31 million. To put this in context, Gennum earned $22 million U.S., or $0.62 U.S. a share, in its fiscal year ended November 30, 2008. (Although it trades on the Toronto exchange, Gennum reports its results in U.S. dollars.) These figures exclude writedowns of investments and other unusual items. Gennum also held cash of $49 million U.S., or $1.38 U.S. a share, as of November 30, 2008. It has just $1-million U.S. in long-term debt, so it has plenty of room to borrow the extra cash it needs to complete the takeover....
LOBLAW COMPANIES LTD. $31 (Toronto symbol L) wants to shift about 10% of its part-time workers to full-time status. Right now, part-timers account for 80% of Loblaw’s workforce. More full-time workers would increase Loblaw’s labour costs, particularly as most of them are unionized. But the company feels it will offset these extra costs by lowering the high turnover rate among part-time workers. Hold. ROYAL BANK OF CANADA $34 (Toronto symbol RY) has paid an undisclosed figure for the 50% of Commission Direct Inc. (CDI) that it does not already own. CDI sells independent research and brokerage services to institutional investors. Gaining full control of CDI should make it easier for Royal to sell more services to CDI’s high-quality clientele. Buy. THOMSON REUTERS INC. $30 (Toronto symbol TRI) plans to launch a new video-news service in June 2009. Unlike cable TV business news channels, this service will only be available to Thomson Reuters’ clients. Users will be able to search for news items on specific companies or topics and view them on a variety of devices, including cellphones. The service should help increase Thomson Reuters’ share of this highly competitive market. Buy.
MOLSON COORS CANADA INC. (Toronto symbols TPX.A $44 and TPX.B $43; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 183.8 million; Market cap: $8.1 billion; Price-to-sales ratio: 1.3; SI Rating: Average) is the world’s fifth-largest brewer by volume. Top brands include Coors Light, Molson Canadian and Carling. Molson Coors Canada took its present form in February 2005 when Molson Inc. and Adolph Coors Co. merged. Canadian shareholders received exchangeable shares of Molson Coors Canada for their Molson shares. These shares carry the same voting and dividend rights as the U.S.-based parent company’s common shares....
CAE INC. $7.00 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 254.9 million; Market cap: $1.8 billion; Price-to-sales ratio: 1.1; SI Rating: Average) is slowly expanding its sales outside the cyclical airline industry. It has won a 20-year, $329.5-million contract to build helicopter simulators and train pilots for Canada’s Department of National Defence. To put the contract in context, CAE’s annual revenue is about $1.4 billion. CAE has also teamed up with the Michener Institute for Applied Health Sciences in Toronto, the Universite de Montreal and the Winnipeg Regional Health Authority to develop medical simulators that will help train doctors to perform surgical procedures. CAE stands to make just $5 million from the deal, but the company feels that medical simulators could soon account for 10% of its sales. CAE is a buy....
SNC-LAVALIN GROUP INC. $31 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151 million; Market cap: $4.7 billion; Price-to-sales ratio: 0.6; SI Rating: Average) reported much higher earnings in 2008: $2.05 a share (or a total of $312.5 million), compared to $0.45 a share (or $69.1 million) in 2007. The gain was mostly because of a $267.3-million, pre-tax operating loss at the engineering firm’s electrical-power division that depressed SNC’s 2007 earnings. The loss was caused by delays in building a new power plant in Brampton, Ontario. SNC’s revenue rose 5.6%, to $7.1 billion from $6.7 billion. Its order backlog stands at $9.6 billion, down 9.4% from $10.6 billion a year earlier. Thanks to the improved earnings, SNC raised its quarterly dividend by 25%, to $0.15 a share from $0.12. The new annual rate of $0.60 yields 1.9%. SNC expects its 2009 earnings will grow to $2.25 a share, and the shares now trade at 13.8 times this estimate. However, SNC’s projection may be overly optimistic. Oil and mining companies account for 30% of SNC’s revenue, and many could cancel their contracts if resource prices remain low....
Finning and SNC-Lavalin sell equipment and services to clients in the resource industry. Both companies have seen their shares fall over the past few months in light of dropping oil and metals prices. Both also stand to gain from increasing government spending on infrastructure. We continue to have a high opinion of both, but we prefer Finning because of its lower p/e ratio and higher dividend yield. FINNING INTERNATIONAL INC. $11 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 170.5 million; Market cap: $1.9 billion; Price-to-sales ratio: 0.3; SI Rating: Above Average) sells, rents and repairs heavy equipment made by Caterpillar Inc. It has major customers in the mining, forest products and construction industries. Finning’s revenue rose 5.8% in 2008, to $6 billion from $5.7 billion in 2007. Finning’s clients ordered more heavy equipment in the first half of the year as a result of high commodity prices. Finning’s operations in the U.K. and South America account for roughly 45% of its sales, and the drop in the Canadian dollar in the last quarter of 2008 increased the contribution from these divisions....
RIOCAN REAL ESTATE INVESTMENT TRUST $12 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 222 million; Market cap: $2.7 billion; Price-to-sales ratio: 3.7; SI Rating: Average) is Canada’s largest real estate investment trust (REIT). It owns 241 retail properties, including 16 under development. RioCan specializes in “Big Box” outdoor malls. Most are in suburban areas where land costs are generally lower than in more developed towns and cities. RioCan’s exposure to the retail industry increases its risk, particularly during a recession. However, its anchor tenants, like Wal-Mart, Cineplex and Metro, tend to do well when the economy is slow. In 2008, RioCan’s revenue rose 6.1%, to $763.8 million from $719.9 million in 2007. Earnings soared 354%, to $146.9 million from $32.4 million. However, this was mainly because RioCan’s 2007 earnings included a $144-million, non-cash charge related to a change in the way Ottawa taxes REITs. In April 2008, RioCan also issued $144 million of new units to pay down debt. As a result, earnings per unit rose 318.8%, to $0.67 from $0.16. Cash flow per unit fell 2%, to $1.48 from $1.51....