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
CAE INC. $13 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 254.0 million; Market cap: $3.3 billion; SI Rating: Average) has paid an undisclosed sum for Sabena Flight Academy, which operates pilot training facilities in Belgium and Arizona. The acquisition expands CAE’s annual training capacity, from 1,000 pilots to 1,400. Demand for pilot training services should continue to rise, as many airlines face pilot shortages due to increasing interest in air travel in Asia and the Middle East. CAE also continues to win new orders for its flight simulators. It recently sold five simulators for $56 million. That’s about 4% of CAE’s annual revenue of $1.4 billion. CAE sold 37 flight simulators in the fiscal year ended March 31, 2008, and has sold 10 so far in fiscal 2009. Sales should continue to grow as airlines upgrade their aging fleets. CAE is a buy.
TIM HORTONS INC. $32 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 184.7 million; Market cap: $5.9 billion; SI Rating: Average) continues to implement its management restructuring program. Some members of the company’s senior management will take on additional responsibilities. Others will leave the company. Tim Hortons will take a $3.8 million charge in the next quarter for the restructuring, but it should result in cost savings of $1.5 million a year. Tim Hortons faces a number of challenges, including weaker consumer spending and higher operating costs. High gas prices may well cut road traffic, a major source of customers for the company. The company also faces higher labour costs, particularly in Ontario, where it has about half of its 2,800 Canadian stores. The minimum wage in Ontario has risen to $8.75 an hour from $8. The minimum wage will rise further to $10.25 by March, 2010. Labour costs are also rising in Alberta. Tim Hortons is now a hold.
These three leading electricity producers use coal, natural gas or oil to generate power, so they’re vulnerable to rising prices for these commodities. Rate hikes should help them offset the higher costs. However, it can take several months before the higher rates have an impact on earnings. To cut risk and enhance growth, all three of these electric utilities are now successfully diversifying into other businesses, such as natural gas pipelines and wind farms. These new projects also give them more cash to fund capital upgrades, and maintain their above-average dividends. We see all three as buys, particularly for income-seeking investors....
EnCana encountered some skepticism when it shifted its focus from conventional energy production into unconventional gas and oil sands properties. These properties are costlier to develop and slower to generate a profit, but they have much greater long-term potential. The company’s latest move to add value is its plan to split itself into separate oil and gas companies. It drew acclaim rather than skepticism, and it helped push the stock up to a new all-time high of $98. We feel further gains are likely. ENCANA CORP. $93 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 750.0 million; Market cap: $69.8 billion; SI Rating: Average) is a leading North American producer of natural gas and oil....
Everybody knows it’s hard to beat the market over long periods. Fewer investors recognize that it’s easy to do a lot worse than the market. It’s especially easy if you fall for every new investment innovation that comes along. Exchange-traded funds (ETFs) are an investment innovation that has advantages over some alternatives, but can still lead to steep losses. ETFs give you a low-cost way to invest in a narrow market segment. That’s cheaper than investing in a mutual fund with a similar focus. ETFs may cost you 0.5% a year, compared to 2% to 3% or higher on a fund. ETFs are also safer than investing in just one or two stocks from the area you are interested in. ETFs spread your money around over dozens, if not 50 or more, stocks....
CANADIAN IMPERIAL BANK OF COMMERCE $58.24, Toronto symbol CM, moved down this week after Moody’s Investors Service downgraded the credit ratings of several bond insurers. These insurers provide CIBC and other banks with guarantees on securities they hold, such as bonds backed by U.S. subprime mortgages. The downgrades could lead to fresh writedowns of about $1 billion. In the three months ended April 30, 2008, CIBC lost $1.1 billion or $3.00 a share, mainly due to a $1.7 billion (after-tax) writedown of illiquid securities. However, CIBC still has enough capital to conduct its operations and satisfy regulatory requirements. Even the $3.48 dividend seems secure, and it yields 6.0%. CIBC is a buy....
Watch Pat McKeough’s June 20 interview on the Business News Network “Market Call” program with Michael Hainsworth. Click here to see the interview. Or, go to www.bnn.ca and you’ll find the link on the lower right side of the page. BCE INC. $34.60, Toronto symbol BCE, should move higher next week now that the Supreme Court of Canada has ruled against a lawsuit launched by the company’s bondholders. The bondholders claimed that the takeover of BCE by a consortium headed by the Ontario Teachers’ Pension Plan would reduce the security of their investments. While this latest ruling greatly improves the chances the $42.75-a-share takeover will go through, problems in the debt markets could still prompt some of the consortium members to back out. That could force the buyers to delay, reprice or scrap the deal. If so, the stock will probably fall, but it is likely to stay above its pre-takeover level of around $30 a share....
PRECISION DRILLING TRUST $27.58, Toronto symbol PD.UN, has launched a hostile takeover offer for Grey Wolf Inc. of Houston. Grey Wolf operates 121 drilling rigs in the U.S. Gulf Coast and Midwest regions. Right now, just 17 of Precision’s 240 rigs operate in the U.S. Expanding outside of Canada will give Precision steadier revenue streams, as many of its Canadian customers suspend exploration during the winter. Precision is offering cash and units worth roughly $2 billion U.S. for Grey Wolf. Precision will limit the cash portion to one-third of the total. The price is nearly five times Precision’s 2007 cash flow of $419.7 million (Canadian) or $3.34 a unit. Precision feels its offer is superior to Grey Wolf’s recent agreement to merge with rival Basic Energy Services, Inc. However, Grey Wolf has rejected Precision’s offer and still plans to merge with Basic Energy....
BOMBARDIER INC., Toronto symbols BBD.A $8.71 and BBD.B $8.72, rose 7% this week after reporting first quarter fiscal 2009 earnings and revenues that exceeded expectations. In the three months ended April 30, 2008, earnings per share jumped to $0.12 from $0.04 a year earlier (all amounts except share price in U.S. dollars). Revenue rose 20.0%, to $4.8 billion from $4.0 billion, due to strong demand for business aircraft, regional jets and railcars. Thanks to its improving outlook, Bombardier plans to resume quarterly dividend payments of $0.025 (Canadian) a share. That implies an annual yield of 1.1%. The class B subordinate voting shares will also receive an additional priority payment of $0.0015625 (Canadian) a share per year, payable quarterly. That gives the class B shares an annual yield of 1.2%. Bombardier is a buy for aggressive investors. The higher yielding ‘B’ shares are the better choice....
TORSTAR CORP. $13 (Toronto symbol TS.B) plans to restructure its newspaper operations. This will cost it $21 million, but should produce annual savings of $12 million. To put that in context, Torstar lost $0.04 a share (total $3.5 million) in the first quarter of 2008 largely from these restructuring costs. It earned $0.20 a share ($15.7 million) in the year-earlier quarter. Revenue fell 6.8%, due to slowing advertising revenue in Ontario. However, Torstar’s expanding Internet operations help diversify its revenues. Best Buy. MANITOBA TELECOM SERVICES INC. $41 (Toronto symbol MBT) earned $0.84 a share before unusual items in the first three months of 2008, up 5.0% from $0.80 a year earlier. Strong growth from its wireless, TV and Internet services will help the company offset lower revenue from its traditional phone operations, and help it keep paying its $2.60 dividend (6.3% yield). Best Buy. IMPERIAL OIL LTD. $57 (Toronto symbol IMO) earned $0.75 a share in the latest quarter, down 7.4% from $0.81 a year earlier, due to production problems at its Edmonton refinery. Imperial is now expanding its four refineries to handle rising oil sands production. Best Buy...