Dividend Stocks

Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

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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Most efficient in North America

Despite higher fuel costs in 2008, CN is still one of the most efficient railways in North America. In 2008, its operating ratio worsened to 65.9% from 63.6% in 2007. (Operating ratio is calculated by dividing a company’s regular operating costs by its revenue. The lower the ratio, the better.) Falling oil prices should lower CN’s operating costs in 2009, and new investments in locomotives and rail yards should also help improve its overall efficiency....

2 min read

Pat McKeough

Dividend Stocks

Tim Adds Ice Cream to its U.S. Stores

TIM HORTONS INC. $29 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 181.6 million; Market cap: $5.3 billion; Price-to-sales ratio: 2.9; SI Rating: Average) aims to spur traffic at its coffee-and-donut stores in the United States with a new alliance with the Cold Stone Creamery chain of upscale ice-cream parlours. Tim Hortons will start selling Cold Stone Creamery ice cream products at 50 of its 500 U.S. outlets. In return, Cold Stone Creamery will sell Tim Hortons’ products at 50 of its 1,450 locations. Tim Hortons gets most of its traffic early in the day, while Cold Stone Creamery’s sales peak in the evening, so this cross-selling agreement should help both chains. Tim Hortons is a buy.

1 min read

Pat McKeough

Dividend Stocks

Updating Our Current Recommendations for Arbor Memorial Services Inc., IGM Financial Inc., Metro Inc. and CGI Group Inc.

ARBOR MEMORIAL SERVICES INC. $19 (Toronto symbol ABO.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 10.7 million; Market cap: $203.3 million; Price-to-sales ratio: 0.9; SI Rating: Average) owns 41 cemeteries, 26 crematoria, four reception centres for memorial services and 87 funeral homes in eight provinces. In its fiscal year ended October 26, 2008, earnings rose 10.0%, to $19.7 million, or $1.84 a share, from $17.9 million, or $1.69 a share, in the prior year. If you disregard unusual items, earnings would have grown 2.7%. Revenue increased 3.2%, to $236.6 million from $229.3 million. Arbor Memorial Services is a buy. IGM FINANCIAL INC. $34 (Toronto symbol IGM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 262.4 million; Market cap: $8.9 billion; Price-to-sales ratio: 3.1; SI Rating: Above Average) reported that its assets under management fell 16.8%, to $97.8 billion as of January 31, 2009 from $117.6 billion a year earlier. The drop was largely caused by falling stock markets, plus $27.3 million in net redemptions in January 2009. It should be noted that IGM’s decline was better than the roughly 27% drop in assets under management for the entire Canadian mutual fund industry....

2 min read

Pat McKeough

Dividend Stocks

Indigo Targets E-Books for New Growth

INDIGO BOOKS & MUSIC INC. $12 (Toronto symbol IDG; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 24.5 million; Market cap: $294 million; Price-to-sales ratio: 0.3; SI Rating: Extra Risk) aims to take advantage of the growing popularity of the Apple iPhone and other smart phones, as well as electronic book-reading devices. It will soon launch shortcovers.com, a new web site that will let users download free and paid electronic content from books, newspapers, magazines and blogs. The electronic book market is small compared to Indigo’s traditional book business. But Indigo hopes this new service will become as successful as Amazon- .com’s Kindle e-book reader, which accounts for over 10% of Amazon’s sales. Indigo is a buy.

1 min read

Pat McKeough

Dividend Stocks

Low Dollar is Good News for These Two

The Canadian dollar will likely remain low relative to most major currencies for the next year or so. This is good news for CAE and Gennum, which get a high proportion their sales from the U.S. and overseas markets. (A low Canadian dollar enhances the contribution of international sales.) Their high research spending also makes them look less profitable than they really are. CAE INC. $7.39 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 254.9 million; Market cap: $1.9 billion; Price-to-sales ratio: 1.3; SI Rating: Average) is a leading maker of flight simulators. It also provides pilot-training services in 20 countries. CAE gets 90% of its revenue from customers outside of Canada. The slowing economy could hurt simulator demand from airlines, which operate in a cyclical industry. However, CAE’s growing military operations help cut its risk. In fact, the company recently won several new military-related contracts worth a total of $80 million. Military operations account for 45% of CAE’s revenue....

2 min read

Pat McKeough

Dividend Stocks

Transit TV Charge Is a Minor Setback

TORSTAR CORP. $7.80 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 78.9 million; Market cap: $615.4 million; Price-to-sales ratio: 0.4; SI Rating: Above Average) owns Transit Television Network, which operates electronic advertising message boards in the transit systems of several U.S. cities. Due to falling ad spending, Transit TV has filed for bankruptcy protection. This will cost Torstar $1.5 million (Canadian). It earned $15.6 million, or $0.20 a share, before one-time items in the third quarter of 2008. Despite this setback, Torstar’s long-term outlook remains bright. Its expanding Internet operations should help offset slowing ad sales at its newspapers. As well, its ownership of romance-fiction publisher Harlequin Enterprises is an under appreciated asset. Torstar is a buy.

1 min read

Pat McKeough

Dividend Stocks

Class-action Settlement Cuts Risk

MAPLE LEAF FOODS INC. $10 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 107 million; Market cap: $1.1 billion; Price-to-sales ratio: 0.2; SI Rating: Average) has finalized the details of several class-action lawsuits it faces related to an outbreak of listeriosis at its Toronto meat-processing plant in August 2008. Maple Leaf will pay a total of $25 million, and has agreed to contribute an extra $2 million if the $25 million is not enough to settle all of the outstanding claims. To put these figures in context, Maple Leaf earned $16.4 million, or $0.13 a share, before unusual items in the third quarter of 2008. The company has strengthened its food safety inspection procedures at all of its plants, which should help it avoid further outbreaks....

1 min read

Pat McKeough

Dividend Stocks

Utility Stocks Offer Safe, Steady Income

All four of these utility companies have increased their dividends in the past few weeks. We feel their high-quality businesses and strong balance sheets will continue to generate plenty of cash flow for investments in new growth projects and more dividend hikes. TRANSCANADA CORP. $33 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 616 million; Market cap: $20.3 billion; Price-to-sales ratio: 2.2; SI Rating: Above Average) operates pipelines that pump natural gas from Alberta to eastern Canada and the United States. It also owns or invests in 19 electrical power plants. Most of TransCanada’s businesses operate under some form of regulation by government agencies. That limits the prices it can charge, but it also provides steady revenue streams for new investments, debt repayments and dividends. TransCanada just raised its dividend for the ninth year in a row. The new annual rate of $1.52 yields 4.6%....

4 min read

Pat McKeough

Dividend Stocks

RioCan Earns Fee on Home Depot Pullout

RIOCAN REAL ESTATE INVESTMENT TRUST $14 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 221 million; Market cap: $3.1 billion; Price-to-sales ratio: 4.4; SI Rating: Average) is building a new, mixed-use residential/commercial complex in downtown Toronto. Home Depot had agreed to be the anchor tenant, but has decided to break its lease. This could force RioCan to slow work on this property, but the trust should have little trouble finding a replacement tenant. Home Deport also probably paid a termination fee of $11.5 million, which is equal to 28% of the $41.6 million, or $0.19 a unit, that RioCan earned in the three months ended September 30, 2008. RioCan is a buy.

1 min read

Pat McKeough

Dividend Stocks

Pension Fund Pressure a Plus

PETRO-CANADA $28 (Toronto symbol PCA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 484.6 million; Market cap: $13.6 billion; Price-to-sales ratio: 0.5; SI Rating: Average) has moved up from its low of $20 in November 2008, partly due to growing pressure from the Ontario Teachers’ Pension Plan, which now owns 3.3% of Petro-Canada’s shares. Ottawa has capped the amount that any single individual can own at 20%, so it’s unlikely that Teachers’ will fully take Petro-Canada over. However, the pension fund will try to persuade the company to work to improve its stock price, possibly by selling its investments in politically risky countries like Libya and Syria. This would free up cash for more promising projects, including Petro-Canada’s Fort Hills oil-sands development. Petro-Canada is a buy.

1 min read

Pat McKeough

Testimonials

The cornerstones of Pat’s strategy–value, diversification and timelines–make his newsletter, The Successful Investor, highly profitable while minimizing risk. His advice is no-nonsense, down-to-earth and based on solid research. You’ll know what to invest in and what to avoid.

Chuck Chakrapani, PhD
Investors Association of Canada
The older I get the better dividends look. For retirees and would-be retirees who want to sleep at night, I can’t think of a better source of information on reliable growing dividend income than Pat McKeough’s newsletter, Dividend Advisor.

Jonathan Chevreau
Financial Post Columnist
As a manager of more than $500 million in mutual funds, I have access to the best brokerage research available in this country. But I still take time to read Pat McKeough’s premium newsletters

John Sartz
I appreciate the 25 years of above market returns I received by following your advice. at least 95% of my investment decisions were based on TSI recommendations.

Chuck J.
Subscriber since 1996. Inner Circle Member Since 2006
The newsletters I receive in Inner Circle Pro are fantastic! I have been following Pat’s advice for years and everything he has said has been amazing. His commentaries are brilliant, insightful, educational, rational and balanced. My returns are almost double the TSE and I have referred many of my friends who have switched over to your services.

Walter H.
Inner Circle Pro subscriber

Browse Premium Topics

Cannabis

Spinoffs

One of the ways a company can try to unlock its own hidden value is by creating a separate company out of a corporate subsidiary. The parent company can either sell stock in the new company to the public, or spin it off—hand the stock out to its own investors.

Dividend Stocks

ETFs

What are ETFs?

ETF is an acronym for exchange traded fund. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.

Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

Blue Chip Stocks

Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

Penny Stocks

A penny stock in general trades for under five dollars a share, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or start-ups in speculative markets like mining or technology.

Growth Stocks

Growth stocks are companies that are likely to have sales and earnings growth well above market average. Frequently they pay few, if any, dividends. Instead they typically reinvest any extra cash flow to promote further growth. Chosen wisely—according to Pat McKeough’s advice—high-quality growth-oriented stocks can be worthwhile additions to most well-diversified portfolios.

Wealth Management

Wealth management is the practice of putting your savings to work so that it continues to grow over your lifetime and will also benefit your heirs. Wealth management encompasses many different areas of investing like long term investment planning and retirement planning.

Mining Stocks

Mining stocks are investments in companies that produce or explore for minerals. Some of these minerals include uranium, coal, molybdenum (which is used in steelmaking), copper, silver and gold. They are affected by fluctuating commodity prices in addition to their own business and operating risks.

How To Invest

Pat McKeough has been making investing for beginners simple—and profitable—by helping investors make big gains for more than 25 years. His advice to beginning investors is the same as it is for all investors: buy high-quality, mostly dividend paying stocks (or ETFs that hold these stocks) and evenly spread your investments over the five main economic sectors (Resources, Manufacturing, Finance, Utilities and Consumer). Pat also believes investors should avoid stocks in the broker/media limelight and focus on those with hidden or little-noticed assets.

Energy Stocks

What are energy stocks?

Businesses that work in the extraction, refining and delivery of energy sources such as natural gas, oil, uranium and coal, are considered energy stocks.