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
INDIGO BOOKS & MUSIC INC. $14 (Toronto symbol IDG; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 24.7 million; Market cap: $345.8 million; SI Rating: Extra risk) earned $3.2 million in its second fiscal quarter ended September 27, 2008, down 4.5% from $3.3 million a year earlier. Earnings per share were unchanged at $0.13. Sales fell 1.9%, to $205.3 million from $209.2 million. The year-earlier quarter benefitted from the release of the final Harry Potter novel. If you exclude this book, overall sales would have increased by $7.6 million. Indigo is a buy. FORTIS INC. $27 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 157.3 million; Market cap: $4.2 billion; SI Rating: Above average) earned $0.31 a share in the third quarter of 2008, up 55.0% from $0.20 a year earlier. However, the latest earnings included a $0.05 a share tax gain related to its May, 2007 acquisition of Terasen Inc., which distributes natural gas in B.C. Excluding this gain, earnings would have grown 30.0%. Higher earnings at Terasen and its regulated power utilities in Canada offset lower earnings at its Caribbean operations. Revenue rose 11.7%, to $727 million from $651 million....
PETRO-CANADA $24 (Toronto symbol PCA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 484.4 million; Market cap: $11.6 billion; SI Rating: Average) owns 60% of the proposed Fort Hills oil sands project. Due to rising raw material and labour costs, the company now estimates that its share of the costs will rise 50% from its earlier estimate to around $17 billion. In light of the recent drop in oil prices and uncertain credit markets, Petro-Canada and its partners will probably focus on the mining portion of this project for now. They will postpone building the more costly upgrader facility, which converts the tar-like heavy oil to refinery-ready crude, until conditions improve. Meanwhile, thanks to sharply higher oil prices, Petro-Canada’s earnings in the three months ended September 30, 2008 jumped to $2.56 a share (total $1.2 billion) from $1.29 a share ($630 million) a year earlier. These figures exclude one-time items. Cash flow per share rose 73.4%, to $4.37 from $2.52. Revenue grew 50.7%, to $8.3 billion from $5.5 billion....
Andrew Peller and Molson Coors have both moved down lately, but by less than the drop in the overall market. That’s because demand for wine and beer tends to remain steady, regardless of the direction of the overall economy. Cost controls are also helping them expand earnings. ANDREW PELLER LTD. $7.50 (Toronto symbol ADW.A; Income Portfolio, Consumer sector: Shares outstanding: 14.9 million; Market cap: $111.8 million; SI Rating: Above average) continues to benefit from strong demand for premium wines, as well as from new products and acquisitions. In its second fiscal quarter ended September 30, 2008, sales rose 13.3%, to $69.4 million from $61.2 million a year earlier. Earnings fell 7.8%, to $2.4 million or $0.17 a share from $2.7 million or $0.18 a share. However, the latest earnings included roughly $1.2 million in unusual pre-tax losses on interest rate and foreign exchange hedging contracts....
TECK COMINCO LTD. $6.65 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 449.4 million; Market cap: $3.0 billion; SI Rating: Extra risk) has completed its purchase of Fording Canadian Coal Trust. Teck is now one of the world’s largest producers of metallurgical coal, a key ingredient in steelmaking. Teck paid roughly $15 billion U.S. in cash and class B subordinate voting shares for Fording. However, Teck expects to receive a $1 billion (Canadian) tax refund on the transaction. The company had to borrow $9.8 billion U.S. to finance the purchase. That included a $5.8 billion U.S. loan due in less than a year. Teck’s shares have dropped over 80% in the past three months. That’s mainly because lower prices for zinc, copper and gold could hurt Teck’s ability to quickly repay the new debt. Falling commodity prices could also prompt Teck to sell some of its operations, issue new shares or cut its $1.00 dividend (15.0% yield)....
MANITOBA TELECOM SERVICES INC. $43 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 64.6 million; Market cap: $2.8 billion; SI Rating: Average) now gets over 44% of its revenue from its growth services, which include wireless, high-speed Internet access and digital TV services. That’s up from about 40% a year earlier. Strong demand for growth services helped offset lower revenue from local and long distance telephone service in the latest quarter. Consequently, overall revenue grew just 0.8%, to $479.9 million from $475.9 million a year earlier. Earnings before one-time items rose 1.4%, to $47.8 million or $0.74 a share from $47.2 million or $0.73 a share. Manitoba Tel’s latest restructuring plan has cut its annual expenses by $22.4 million so far in 2008. That should help it keep paying its $2.60 dividend, which yields 6.0%....
BCE INC. $37 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 806.2 million; Market cap: $29.8 billion; SI Rating: Above average) continues to trade 13.5% below the $42.75-a-share takeover offer from a group headed by the Ontario Teachers’ Pension Plan. That’s mainly due to concerns that the credit crisis will prompt lenders to break their commitments to provide the necessary financing. However, we still feel the takeover will close as planned by December 11, 2008. If the deal does fall through, the consortium would have to pay BCE a break-up fee of $1.2 billion. BCE would probably use the cash to resume quarterly dividend payments of $0.365 a share, for a current yield of 3.9%. The company could also buy back stock. BCE is a buy.
We recommend few income trusts. That’s because most trusts involve substantial risk, such as focusing on a single commodity or geographic area. Here are four trusts we do see as buys. Despite Ottawa’s plan to start taxing trust distributions in 2011, they should continue to pay above-average yields for years to come. These four trusts should also appeal to BCE investors seeking new sources of income, assuming that the BCE privatization goes through as planned (see box this page). However, you should continue to limit income trusts to no more than, say, 15% of your total portfolio....
Investors worry that President Obama will hurt the economy by raising taxes and working against free trade. However, Obama may turn out to be more conservative in action than you’d guess from looking at his circle of friends and associates, or some of his earlier writings. U.S. politicians are rarely as bad or extreme in office as you’d expect, based on their campaign talk. After an election, they naturally gravitate toward the center of the political spectrum....
The worldwide credit crisis has hurt all of Canada’s big five banks. Still, we continue to have a positive view of all of them. The banks have already taken substantial writedowns, which may cover most of the damage. As well, Ottawa’s new plan to buy up to $75 billion of home mortgages from the banks, if needed, further cuts their risk. All investors should aim to own two or three Canadian bank stocks as part of a well-diversified portfolio. For new buying, we still prefer Bank of Nova Scotia. It has the least exposure of the five to the subprime mortgage problems in the United States. As well, Bank of Nova Scotia’s expanding international operations will let it profit from rising prosperity in developing countries. The bank is also taking advantage of the turmoil in financial markets to expand its domestic wealth management businesses with timely acquisitions. BANK OF NOVA SCOTIA $38 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 990.0 million; Market cap: $37.6 billion; SI Rating: Above average) is Canada’s third-largest bank after Royal Bank and Toronto-Dominion Bank, with total assets of $462.4 billion. It provides a wide variety of financial services through 2,560 branches and offices in Canada and over 50 other countries....
One of the brightest signs in today’s market is that many great stocks now trade below 10 times earnings. That’s especially true of high-quality technology issues, since they spend so heavily on research, which gets written off against earnings like a routine expense. Low p/e ratios are also particularly appealing at times when interest rates are low, as they are now. Of course, earnings could drop next year and push up those p/e ratios. Stock prices could move lower, for a variety of reasons. But that’s always a risk. To profit best, you need to invest mainly in well-established companies that are likely to recover from the economic downturn and go on to produce still higher earnings in the future. BCE INC. $25.25, Toronto symbol BCE, fell 34% on Wednesday on fears that the $42.75-a-share takeover offer from a consortium headed by the Ontario Teachers’ Pension Plan may be dead....