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
Economic turmoil over the past few months, and the sharp drop in stock prices, have rekindled investor interest in bonds. This is understandable, since bonds provide steady income streams and a guarantee to repay the principal at maturity. However, bond prices will likely fall over the next few years as interest rates inevitably rise again. Big government budget deficits could spur inflation and push up rates, for example. We continue to recommend that you invest only a small portion of your portfolio in bonds and other fixed income instruments. Instead, you should aim to build a diversified portfolio of well-established companies with long histories of rising dividends....
Canada’s banking industry is still healthy despite the problems caused by the worldwide credit crisis. Most of the big five banks have also issued new preferred and common shares in the past few months. The extra funds put them in a good position to make timely acquisitions and keep paying above-average dividends. ROYAL BANK OF CANADA $30 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $39 billion; Price-to-sales ratio: 1.4; SI Rating: Above Average) is Canada’s largest bank, with total assets of $723.9 billion. Royal continues to expand its operations in the United States. These now account for 17% of its revenue, and have increased Royal’s exposure to the struggling U.S. housing market....
BCE INC., $26.12, Toronto symbol BCE, earned $1.8 billion in 2008, down 3.9% from $1.9 billion in 2007. Earnings per share fell 3.8%, to $2.25 from $2.34 on more shares outstanding. Revenue fell 0.3%, to $17.7 billion from $17.75 billion. These figures exclude restructuring charges, mainly job cuts, and other one-time items. The restructuring should cut BCE’s annual expenses by $400 million. BCE continues to lose traditional phone customers to cable companies and Internet-based phone services, but these losses are slowing. Meanwhile, BCE’s cellphone business is growing strongly; revenue rose 7.6% in 2008, and its subscriber base grew by 4.5%. The wireless division accounts for 25% of BCE’s revenue and 43% of its profit. Higher demand for BCE’s high-speed Internet and satellite-TV services helped offset lower revenue from its traditional phone services. Despite the lower earnings, BCE raised its quarterly dividend by 5.5%, to $0.385 a share from $0.365. The new annual rate of $1.54 yields 5.9%....
NOVA CHEMICALS CORP., $1.99, Toronto symbol NCX, fell sharply after it renegotiated the conditions of its lending agreements. To avoid breaching certain covenants, which would require Nova to repay all of its loans immediately, the company must now raise $100 million U.S. in new financing by February 28, 2009, plus an additional $100 million U.S. by June 1, 2009. To meet these conditions, the plastic and chemical maker may have to issue new shares at depressed prices. (Demand for plastics is highly cyclical, and the slowing economy has hurt Nova’s sales and earnings.) This could substantially dilute the current value of its shares. As well, if Nova needs to borrow more money, it would likely have to pay much higher rates, which would drive its interest costs up. Nova has significant operations in Alberta, so it may receive temporary assistance from the Alberta government. As part of any refinancing plan, Nova would probably have to suspend its quarterly dividend payments of $0.10 (Canadian) a share. The dividend now yields a high 20.1%, and cost Nova $31 million U.S. in 2008....
AGRIUM INC. $38 (Toronto symbol AGU) has cut production at some of its facilities due to rising inventories of nitrogen-based fertilizers in North America. Many farmers are also delaying purchases of new seed and fertilizer as a result of weakening crop prices. Hold. DUNDEE CORP. $5.88 (Toronto symbol DC.A) is down over 50% in the past six months. That’s partly due to its exposure to falling prices for zinc, copper, oil and natural gas. In the three months ended September 30, 2008, Dundee’s portfolio of junior resource companies incurred a pre-tax loss of $12.4 million, compared with a profit of $582,000 a year earlier. Dundee also wrote down illiquid securities by $37.9 million. Consequently, it reported a loss of $1.9 million or $0.03 a share in the quarter. Dundee earned $114.1 million or $1.33 a share in the year-earlier quarter. Hold. CGI GROUP INC. $9.75 (Toronto symbol GIB.A) provides information technology and business-process services to a wide range of business and government clients. Thanks to the company’s strong reputation, it won $320 million U.S. in new contracts and extensions from government agencies in the United States in 2008. That’s equal to 10% of CGI’s annual revenue. The company now gets a third of its revenue from non-cyclical clients such as governments and healthcare organizations, which cuts its risk. Buy.
EMERA INC. $22 (Toronto symbol EMA; Income Portfolio, Utilities sector; Shares outstanding: 112.1 million; Market cap: $2.5 billion; Price-to-sales ratio: 1.8; SI Rating: Average) generates and distributes electricity to roughly 600,000 customers in Nova Scotia and Bangor, Maine. In the past few years, Emera has steadily expanded into new areas to cut its reliance on Nova Scotia. It owns 12.9% of the Maritimes and Northeast natural gas pipeline, and 50% of a hydroelectric facility in Massachusetts. Emera has also targeted the Caribbean region for new investments, and now owns 19% of the main power utility in St. Lucia and 25% of Grand Bahama Power Co.
New strategy spurred growth
Emera’s revenue fell from $1.15 billion in 2003 to $1.13 billion in 2004. But thanks in part to its new businesses, revenue grew to $1.34 billion in 2007. Coal and oil account for about 80% of Emera’s fuel needs, and higher prices cut earnings from $1.20 a share (total $128.2 million) in 2003 to $1.11 a share ($122.1 million) in 2005. However, new natural gas supply contracts helped offset higher fuel prices. Consequently, earnings improved to $1.36 a share ($151.3 million) in 2007. A one-time accounting gain of $0.08 a share also boosted Emera’s 2007 earnings....
MDS INC. $7.43 (Toronto symbol MDS; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 121.1 million; Market cap: $899.8 million; Price-to-sales ratio: 0.5; SI Rating: Average) lost $233 million or $1.91 a share in the fiscal year ended October 31, 2008 (all amounts except share price and market cap in U.S....
TRANSCANADA CORP. $34 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 615.1 million; Market cap: $20.9 billion; Price-to-sales ratio: 3.0; SI Rating: Above average) plans to build a new pipeline called Pathfinder that would transport natural gas from Colorado to North Dakota. The company planned to offset the $2 billion cost of building the new line by selling a minority stake in it to two local gas producers. However, these producers had to withdraw from the project as the credit crisis has hurt their borrowing ability. TransCanada now hopes to find new partners. But even if it has to cancel the Pathfinder project, it’s only a small part of its overall operations. TransCanada is a buy....
TECK COMINCO LTD. $5.73 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 449.4 million; Market cap: $2.6 billion; Price-to-sales ratio: 0.4; SI Rating: Extra risk) currently sells its coal to steelmakers for about $300 U.S. a tonne. However, the company must re-negotiate these contracts each year, and prices in 2009 could drop by 50% or more. That could make it harder for Teck to repay a $5.8 billion U.S. bridge loan that it used to fund its recent purchase of Fording Canadian Coal Trust. Teck now plans to cut 13% of its workforce, and reduce coal production by 20%. These moves should save it roughly $85 million a year. Tax refunds and sales of certain businesses should also give Teck $2.4 billion for debt repayments. That should make it easier for the company to convert the remaining part of the bridge loan into a more manageable long-term loan. Teck Cominco is still a buy.
Transcontinental has dropped roughly 40% in the past three months, as the turmoil in credit markets has hurt its direct mail operations. Lower advertising spending has also weighed on its publishing business. However, the company is doing a good job controlling costs and expanding its Internet businesses. That should help it cope with the current downturn. TRANSCONTINENTAL INC. $8.50 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 80.8 million; Market cap: $686.8 million; Price-to-sales ratio: 0.3; SI Rating: Average) now trades at just 5.1 times its forward earnings estimate of $1.66 a share. That’s mainly because advertisers are shifting away from traditional direct mail services to the Internet. Direct marketing accounts for 50% of Transcontinental’s revenue, and 40% of its profit. Transcontinental is also a major commercial printer (25% of revenue, 30% of profit). Many of its major customers, such as newspaper publishers, are now stagnating as the slowing economy hurts their circulation sales and advertising revenues....