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
SNC-LAVALIN INC. $58 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 151.0 million; Market cap: $8.8 billion; SI Rating: Average) earned $0.47 a share (total $70.9 million) in the first quarter of 2008, compared to a loss of $0.69 a share ($103.9 million) a year earlier. However, the year-earlier quarter included a pre-tax loss of $179.0 million stemming from the bankruptcy of a key supplier to SNC’s electrical power business. Revenue grew 38.5%, to $1.8 billion from $1.3 billion. The stock has gained 50% since January, and now trades at 36.7 times the $1.58 a share it will likely earn in 2008. That’s high considering SNC relies on public works projects, often in politically unstable areas of Africa and Asia, for much of its growth. Our high dollar also hurts the value of some of its overseas earnings. SNC-Lavalin is a hold.
TELUS CORP. (Toronto symbols T $47 and T.A $45; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 337.4 million; Market cap: $14.8 billion; SI Rating: Above average) earned $291.0 million in the three months ended March 31, 2008, up 49.4% from $194.8 million a year earlier. Per-share earnings rose 57.9%, to $0.90 from $0.57, due to fewer shares outstanding. If you disregard a one-time charge in the year-earlier quarter, earnings per share were unchanged. Revenues increased 6.8%, to $2.35 billion from $2.2 billion, thanks to a 19% rise in revenue from Telus’s high-speed Internet services. Wireless revenue rose 10% due of the growing use of smartphones. These devices let users access email and web pages. Strong demand for these services is helping Telus offset weaker growth at its traditional telephone business. Telus is a buy. The cheaper, non-voting ‘A’ shares are the better choice.
The main drawback to most income and royalty trusts is that many of them contain low quality assets. We aim to zero in on trusts with high quality assets that provide stable cash flows and distributions. Even the best trusts, such as these three, are still highly cyclical. However, we feel they will continue to pay above-average yields, even after Ottawa starts taxing trust distributions in 2011. Investors should limit their income trust holdings to no more than 15% of their overall portfolio....
As we’ve often pointed out, most spinoffs lead to above-average results for a period of years, for both the parent company and the company that gets created and spun off. So it’s no surprise that EnCana’s decision to split itself up into two companies — one focusing on natural gas, the other on oil sands and oil refineries — has already begun to pay off for its shareholders. ENCANA CORP. $91 (Toronto symbol ECA) differs from the typical spinoff in that the two portions are of comparable size. More often, the spinoff company is much smaller than the parent. But the principle is the same. The management is breaking up the company into two or more parts, despite the fact that this works against management’s interests, by reducing the assets to manage. Good managers do this for two reasons. First, they aim to serve shareholders’ interests. Second, the two companies generally experience an increase in stock values and/or a speedup in growth, which generally lead to higher pay for management....
Real Estate Investment Trusts (REITs) are among the most stable of the royalty and investment trusts. That’s because they own non-depleting assets, and can lock in lease rates and financing costs for long terms. The best REITs have good management, well-located properties and balance sheets strong enough to weather an economic downturn. They have high-quality tenants, and carefully match their debt with their leases. They also have room to build or expand on existing properties. We don’t think you should overindulge in REITs. But if you stick with the highest-quality issues, like RioCan, you’ll likely make steady returns with low risk....
BANK OF NOVA SCOTIA $49.75, Toronto symbol BNS, earned $980 million in its second fiscal quarter ended April 30, 2008, down 5.8% from $1.04 billion a year earlier. Per-share earnings fell 5.8%, to $0.97 from $1.03. The declines were largely due to higher provisions for loan losses, which jumped to $153 million from an unusually low $20 million in the year-earlier quarter. Revenue rose 3.2%, to $3.2 billion from $3.1 billion, partly due to acquisitions. The bank has increased its quarterly dividend 4.3%, from $0.47 a share to $0.49. The new annual rate of $1.96 yields 3.9%. Bank of Nova Scotia is a buy....
BCE INC. $33.60, Toronto symbol BCE, fell sharply this week after Quebec’s Supreme Court ruled in favour of a lawsuit launched by the company’s bondholders to block the takeover. The bondholders felt it reduced the security of their investments. BCE and the Ontario Teachers’ Pension Plan, which heads a private group that has agreed to buy BCE for $42.75 a share, plan to appeal this ruling to the Supreme Court of Canada. That will likely delay the takeover beyond the June 30, 2008 target date. It could also force the consortium to re-price or scrap the takeover. Depending on the circumstances, BCE may receive a $1 billion or $1.24 a share break-up fee from the consortium if the deal falls through. That’s equal to 3% of its market cap of $30 billion. The company could use that cash to expand its wireless and high-speed Internet services, or increase its $1.46 dividend (4.3% yield). BCE could also unlock some of its value by spinning off some of its operations....
ENCANA CORP. $94.20, Toronto symbol ECA, gained 10% this week after it decided to split itself up into two companies – one focusing on natural gas, the other on oil sands and oil refineries. The gas company will keep the EnCana name, while the oil company will assume a new name. Shareholders will receive one new common share in each new company for every EnCana share they hold. Investors will not be liable for capital gains taxes until they sell their new shares. EnCana intends that the initial combined dividends of the two companies will be equivalent to its current annual dividend rate of $1.60 U.S. per share (1.7% yield). EnCana aims to complete the plan in early 2009. The EnCana situation is a little different from a typical spinoff in that the two portions are of comparable size. More often, the company that is created and handed out or spun off to its shareholders as a special dividend is much smaller than the parent....
BCE INC. $37.30, Toronto symbol BCE, earned $0.57 a share in the three months ended march 31, 2008, up 9.6% from $0.52 a year earlier. These figures exclude restructuring costs and gains on the sale of investments. Most of the increase was due to savings from the restructuring, as well as lower taxes and interest expenses. Revenue crept up to $4.39 billion from $4.38 billion, as growing demand for BCE’s wireless and Internet services offset lower revenue from its traditional telephone operations. The stock is now trading 13% below the $42.75 a share that a group led by the Ontario Teachers’ Pension Plan has offered for the company. That’s because investors fear that problems in the debt markets will force the consortium to delay, reprice or scrap the deal. However, we feel the takeover will go through by the end of the year. BCE is still a buy....
TRANSCANADA CORP. $37.50, Toronto symbol TRP, owns 50% of Broadwater Energy, a joint venture with Royal Dutch Shell, which hopes to build an offshore liquefied natural gas terminal in Long Island Sound. However, New York State and New Jersey have rejected the proposal. Broadwater now plans to appeal to the U.S. Commerce Department. The decision forced TransCanada to write off the $27 million it has already spent on the Broadwater project. If you exclude all unusual items, TransCanada’s earnings in the three months ended March 31, 2008 still rose 30.4%, to $326 million from $250 million a year earlier. Per-share earnings grew 22.4%, to $0.60 from $0.49, on more shares outstanding. Most of the higher earnings came from the acquisition of pipelines and natural gas storage facilities in February 2007. However, overall revenue fell 4.5%, to $2.1 billion from $2.2 billion, due to the temporary shutdown of a power plant in Quebec. TransCanada is a buy....