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
IMPERIAL OIL LTD. $42 (Toronto symbol IMO; Conservative Growth Portfolio, Resources sector; Shares outstanding: 859.4 million; Market cap: $36.1 billion; Price-to-sales ratio: 1.2; SI Rating: Average) had proven oil reserves of roughly 2.3 billion barrels at the end of 2008. This is a 50% increase over 2007. Imperial’s new Kearl Lake oil-sands project, which added 800,000 barrels to the total, is the main reason for the rise. Kearl Lake should begin operating in 2012. At its current production rates, Imperial’s reserves should last 25 years. This cuts its risk. Another hidden asset is Imperial’s refinery operations, which accounted for 23% of its 2008 earnings. They need oil to make gasoline, so they profit from cheap oil prices. Imperial Oil is a buy.
GENNUM CORP. $3.65 (Toronto symbol GND; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.4 million; Market cap: $129.2 million; Price-to-sales ratio: 0.8; SI Rating: Above Average) continues to spend a high 25% of its revenue on research. This hurts its earnings, but often leads to breakthroughs that help Gennum keep its lead in the niche video-storage and transmission market. For example, Gennum has developed a new way to transmit high-definition video signals over standard coaxial television cable. Most closed-circuit video surveillance systems use these cables, so Gennum’s technology will let businesses improve the quality of these signals without buying special high-definition video cables. Gennum is a buy.
Canada’s telephone companies face growing competition from cable companies and Internet-based phone services. New entrants in the wireless industry will also push the established wireless companies to cut their rates. We feel these four telecom companies will continue to dominate their markets. Steady cash flow from their traditional phone businesses will help them invest in new growth areas, like wireless, and maintain their high dividend yields. BCE INC. $24 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 803.1 million; Market cap: $19.3 billion; Price-to-sales ratio: 1.1; SI Rating: Above Average) has over 7.5 million telephone and Internet customers in Ontario and Quebec. It also has 6.5 million wireless subscribers across Canada....
CP’s shares soared to a high of $90 in July 2007. They have since fallen 60%, to $36. The stock was probably overpriced at $90 and 21 times earnings. But it now trades at 9.1 times this year’s forecast earnings, and it yields 2.8%. This well-established company is a mainstay of the Canadian economy. It’s a rare low-risk treat to be able to buy it at today’s bargain level. CANADIAN PACIFIC RAILWAY LTD. $36 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 167.7 million; Market cap: $6 billion; Price-to-sales ratio: 1.2; SI Rating: Above Average) ships freight over a 25,000-kilometre rail network between Montreal and Vancouver. In the United States, its subsidiaries connect its Canadian lines to major hubs in the midwest and northeast. Alliances with other railways extend CP’s reach to Mexico....
I’m a lukewarm fan at best of many government regulations. But I was happy to hear that the U.S. may re-instate the ‘uptick rule’. Some financial institutions are vulnerable today partly because of bad regulatory rules. Without the uptick rule, hedge funds are free to sell them short at any price, forcing them down before they can mend their balance sheets. The uptick rule restores some balance. It seems many investors agreed, and that helps explain the big rise in the market on March 10. This rally could continue....
AGRIUM INC., $46.00, Toronto symbol AGU, may now mail its $67.75 cash-and-stock offer to buy U.S.-based fertilizer producer CF Industries Holdings Inc. (New York symbol CF), directly to CF’s shareholders, now that CF’s management has rejected it (all amounts except share price in U.S. dollars). CF’s stock is now trading at $68.61, which indicates that investors anticipate a higher bid. Agrium’s offer for CF is worth roughly $3.3 billion (56% of the offer is stock and 44% is cash). This is a big acquisition for Agrium, which earned $1.3 billion, or $8.34 a share, in 2008 However, CF has a shareholder-rights plan that lets shareholders buy new shares at half the market price if an investor tries to buy more than 15% of the outstanding shares without the approval of CF’s directors. This makes hostile takeovers like Agrium’s less likely to succeed....
BANK OF MONTREAL, $27.48, Toronto symbol BMO, earned $225 million in its first fiscal quarter, which ended January 31, 2009, down 11.8% from $255 million a year earlier. During the quarter, the bank issued about $1 billion of new common shares. Consequently, earnings per share fell 17%, to $0.39 from $0.47, on more shares outstanding. However, the latest quarterly earnings included a $359-million (or $0.69 a share) writedown of illiquid securities, including asset-backed commercial paper, held by the bank’s trading division. If you exclude all unusual charges, Bank of Montreal would have earned $1.09 a share. The slowing economy continues to weigh on the bank’s earnings. Loan-loss provisions rose 86.1% in the latest quarter. Most of this increase came from Bank of Montreal’s U.S. operations, particularly loans related to the commercial real estate and manufacturing industries. The U.S. accounts for about 10% of the bank’s revenue. Overall revenue in the quarter rose by 20.5%, to $2.4 billion from $2 billion. Strong gains at the bank’s personal banking operations in Canada and the U.S. offset slow growth at its corporate lending and wealth management businesses. A new high-interest savings account, the launch of the new Tax-Free Savings Account and new credit cards that provide rewards based on use helped the bank lure more customers during the quarter....
NOVA CHEMICALS CORP., $7.03, Toronto symbol NCX, has accepted a friendly takeover offer from International Petroleum Investment Co., which is owned by the government of Abu Dhabi (Abu Dhabi is the capital city of the United Arab Emirates.) Nova shareholders will get $6.00 U.S. a share in cash, or 359.9% more than Nova’s closing price of $1.66 (Canadian) on Friday, February 20, 2009, the last trading day before the takeover was announced. Two-thirds of Nova’s shareholders, and Canadian and U.S. competition regulators, need to approve the deal. The plastics and chemicals company should have little trouble getting these approvals. The slowing economy has hurt demand for Nova’s industrial plastics, and it was dangerously close to breaching the covenants of its lending agreements earlier this month. If Nova didn’t agree to the takeover, its lenders could have demanded that it repay all of its loans immediately. Nova’s total debt at the end of 2008 was $1.7 billion (all amounts except share price in U.S. dollars), or roughly four times its current market cap. This includes $380 million due in 2009. As of December 31, 2008, it held $74 million, or $0.89 a share, in cash....
ENCANA CORP., $48.27, Toronto symbol ECA, has agreed to sell the gas from its Deep Panuke offshore development near Nova Scotia to Repsol YPF SA, a Spanish oil-and-gas firm. The Deep Panuke project, worth $550-million (all amounts except share price in U.S. dollars), should begin operating in 2010, and its reserves could last up to 18 years. Locking Repsol in as a buyer helps cut EnCana’s risk. Meanwhile, EnCana earned $4.4 billion before unusual items in 2008, up 7.4% from $4.1 billion the previous year. Earnings per share rose 9.3%, to $5.86 from $5.36 on fewer shares outstanding. Cash flow per share rose 12.8%, to $12.48 from $11.06. A 6% rise in production, plus much higher oil and natural-gas prices in the first half of 2008 were behind the gains. Through hedging contracts, EnCana has locked in prices for two-thirds of its natural gas production for the first ten months of 2009. The average price of $9.13 per thousand cubic feet that EnCana gets under these deals is 125.4% more than the current spot price of $4.05. Natural gas accounts for over 80% of EnCana’s total production....
IMPERIAL OIL LTD. $39 (Toronto symbol IMO) plans to increase capital spending by 60% in 2009. Most of the extra spending is for its proposed Kearl Lake oil-sands project in northern Alberta. Imperial owns 70% of Kearl, while parent company ExxonMobil Corp. owns the rest. Kearl’s reserves should last 40 years, and moving ahead with it makes sense for Imperial despite low oil prices, as the economic downturn has cut the cost of labour and materials. Best Buy. ANDREW PELLER LTD. $7.40 (Toronto symbol ADW.A) reported that sales in its third fiscal quarter, ended December 31, 2008, rose 10.4%, to $72.9 million from $66.1 million a year earlier. The gain was largely due to acquisitions, new products and strong demand for its premium wine brands. The company lost $0.13 a share, compared to a profit of $0.35 a share in the year-earlier quarter. If you disregard unusual items, earnings would have increased 1.6%. Buy. PENGROWTH ENERGY TRUST $10 (Toronto symbol PGF.UN) recently cut its monthly distributions by 24% to conserve cash in light of low oil and natural gas prices. However, it plans to spend 47% less on capital projects in 2009, which should help it maintain the current payout rate. Buy.