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
BANK OF MONTREAL $49 (Toronto symbol BMO) earned $0.98 a share in its third fiscal quarter, ended July 31, 2008, down 23.4% from $1.28 a year earlier. The drop was mainly caused by higher loan-loss provisions, particularly from two corporate loans linked to the weak U.S. mortgage market. However, overall revenue rose 7.5%, to $2.75 billion from $2.6 billion, reflecting strong gains at all of its main businesses. Buy. TRANSCANADA CORP. $38 (Toronto symbol TRP) has agreed to combine its natural gas transmission assets in Alberta with those of Canadian Utilities Ltd. Each company will continue to separately manage its own assets, but regulators will treat the merged system as a single entity with a single rate structure. This alliance should improve the efficiency of both systems. Conservative Investor Best Buy. ENCANA CORP. $69 (Toronto symbol ECA) is down 30% from its all-time peak of $98 in May 2008, largely because of falling oil and natural gas prices. However, EnCana’s upcoming split into two companies — one focusing on natural gas, the other on oil sands and oil refineries — enhances the long-term prospects of both of these businesses. Conservative Investor Best Buy....
SAPUTO INC. $28 (Toronto symbol SAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 206.4 million; Market cap: $5.8 billion; SI Rating; Average) is Canada’s largest producer of dairy products, including milk, butter and cheese. It also produces dairy products in the United States, Argentina and Europe. These operations account for 97% of its revenue. The remaining 3% comes from its bakery operations, which make snack-cakes, cookies and tarts. Much of the company’s recent growth comes from 16 acquisitions of bargain stocks over the past 10 years. We generally downplay companies that expand through acquisitions, due to the hidden risk that comes with most new purchases. However, Saputo has a strong record of picking up struggling operations with bargain stocks and quickly turning them around.
Focused on international markets
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CAE INC. $11 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 254.9 million; Market cap: $2.8 billion; SI Rating: Average) continues to win new orders for its flight simulators and pilot training services. It recently received contracts for four simulators worth $54 million. CAE sold 18 simulators in the first half of its current fiscal year, compared with 37 in the fiscal year ended March 31, 2008. Demand should continue to grow as airlines upgrade their aging fleets. Meanwhile, CAE earned $0.18 a share in its first fiscal quarter ended June 30, 2008, up 20% from $0.15 a year earlier. Revenue grew 9.4%, to $392.1 million from $358.3 million. CAE is a buy.
ARBOR MEMORIAL SERVICES INC. $25 (Toronto symbol ABO.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 10.7 million; Market cap: $267.5 million; SI Rating: Average) owns 41 cemeteries, 27 crematoria, four reception centres located on cemetery premises, and 88 funeral homes in eight provinces. It earned $0.54 a share in its third fiscal quarter ended July 31, 2008, up 35.0% from $0.40 a year earlier. Revenue rose 8.6%, to $62.0 million from $57.1 million. Thanks to the higher earnings, Arbor now plans to pay quarterly dividends of $0.11 a share, up sharply from its old token rate of $0.0175 a share. That pushed up its yield up to 1.8% from just 0.3%. Arbor Memorial Services is a buy....
TIM HORTONS INC. $33 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 183.2 million; Market cap: $6.0 billion; SI Rating: Average) earned $75.0 million in the second quarter of 2008, up 11.5% from $67.2 million a year earlier. Per-share earnings rose 14.5%, to $0.41 from $0.36, on fewer shares outstanding. Sales grew 9.8%, to $510.7 million from $465.3 million, thanks to successful new menu items such as green tea and whole grain muffins. Same-store sales rose 5.7% in Canada, and 3.1% in the United States. Tim Hortons began trading in April, 2006 at $27.00 a share. Although it was a new issue, we recommended it due to its strong market share and the high earnings potential of its brands. We still like its long-term investing outlook. However, weaker consumer confidence and high gasoline prices could hurt the company’s sales growth in the next few months. It also faces higher labour and food costs. Tim Hortons is still a hold....
Every portfolio needs a selection of mainstays that are safe investments, and we believe Canada’s two main railways can help provide these. High fuel costs, flooding in the U.S. Midwest and a slowing economy have hurt earnings at Canada’s two main railways. However, both CP and CN are doing a good job of passing higher fuel costs along to their customers, which helps these two railways remain safe investments. Ongoing efficiency improvements should also increase their long-term profitability. We feel that every Canadian investor should own at least one of these railways as one of their portfolio’s safe investments....
FINNING INTERNATIONAL INC. $24 (Toronto symbol FTT; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 172.7 million; Market cap: $4.1 billion; SI Rating: Above average) is one of the world’s largest dealers of heavy equipment made by Caterpillar Inc. Products include tractors, bulldozers, pavers and trucks. Major customers include the mining, forest products and construction industries. In the three months ended June 30, 2008, Finning earned $67.2 million, down 9.3% from $74.1 million a year earlier. Earnings per share fell 7.1%, to $0.39 from $0.42, on fewer shares outstanding. The lower earnings were largely due to costs related to the integration of Collicutt Energy Services, which Finning acquired earlier this year for $135.3 million. Collicutt makes and services gas compression equipment and power generators for oil and gas well operators in Western Canada. Thanks partly to the new operations, revenue in the quarter grew 2.3%, to $1.53 billion from $1.50 billion....
ROYAL BANK OF CANADA $50 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.3 billion; Market cap: $65.0 billion; SI Rating: Above average) earned $0.92 a share in its third fiscal quarter ended July 31, 2008, down 13.2% from $1.06 a year earlier. The drop is largely due to writedowns of bad loans at its U.S. banking operations, plus securities tied to U.S. subprime mortgages. However, if you disregard all unusual items, Royal earned $1.12 a share in the latest quarter, exceeding the consensus estimate of $1.07. This was mostly due to gains for Royal’s Canadian retail banking, where profit surged 19%. The bank’s wealth management and insurance businesses also reported strong earnings growth. Revenue grew 7.9%, to $5.9 billion from $5.4 billion. Royal Bank is a buy.
TERANET INCOME FUND $11.50 (Toronto symbol TF.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 159.6 million; Market cap: $1.8 billion; SI Rating: Speculative) is the target of a hostile $11-a-unit takeover offer from the Ontario Municipal Employees Retirement System. We generally avoid initial public offerings, since many carry hidden risks. We made an exception for Teranet, a June, 2006 new issue which we began recommending in December, 2007. Teranet’s exclusive license to run Ontario’s electronic land registry system until 2017 cuts its risk, and gives it steady cash flows. Ontario limits holdings by any single investor in Teranet to 25%, so a Teranet takeover needs provincial approval to succeed. That may mean competing bids will be slow to emerge. However, Teranet’s units trade slightly above the offer price, which suggests another bid is a possibility. In addition, Teranet is reviewing various ways to increase its unitholder value. That could lead to an auction by competing bidders at higher prices....
We advise most investors to place the bulk of their holdings in the Finance sector of their portfolio in two or more of the big five Canadian banks. The banks have been among the market’s top performers for several decades now, and continue to offer an attractive combination of growth and income. We also recommend that investors diversify their Finance investments with non-bank Finance sector stocks, such as these four. Like the big banks, they trade at reasonable levels in relation to their earnings. Great-West Lifeco and IGM Financial also pay above-average dividends. However, we see only three as buys right now. GREAT-WEST LIFECO INC. $32 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 894.4 million; Market cap: $28.6 billion; SI Rating: Above average) is Canada’s largest insurance company, with assets under administration of $392.8 billion. The company also provides retirement planning and wealth management services. Power Corp. controls 70.6% of Great-West’s shares....