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
Before letting any investment rule for tax shelters play a role in your retirement investing decisions, make sure it makes sense for you in today’s market. For instance, one long-standing retirement investing rule for tax shelters says you should hold fixed-return investments, like bonds, in your RRSP and hold stocks outside your RRSP. Its rationale is two-fold. First, bonds are safer than stocks because they guarantee repayment of principal....
Many Canadians tend to stick with the five big banks when it comes to the Finance segment of their portfolios. While we do recommend that most investors hold two or more bank stocks, you should also diversify your holdings with high-quality non-bank stocks such as Great-West Lifeco or IGM Financial. Both companies are leaders in their fields (insurance and mutual funds), are cheap in relation to earnings and have long histories of rising dividends. Their conservative investing styles have also helped shield them from big writedowns of securities backed by subprime mortgages and other risky assets. GREAT-WEST LIFECO INC. $32 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 892.5 million; Market cap: $28.6 billion; SI Rating: Above average) is Canada’s largest insurance company, with over $400 billion in assets under administration. Power Corp. controls 70% of Great-West’s shares....
NORTEL NETWORKS CORP. $8.48, Toronto symbol NT, fell over 20% this week after it reported growing losses and a new restructuring plan. In 2007, Nortel lost $957 million or $1.98 a share (all amounts except share price in U.S. dollars). That figure included a $1.1 billion (pre-tax) non-cash writedown of a deferred tax asset. Excluding all one-time items, Nortel earned an estimated $0.23 a share in 2007. The company earned $28 million or $0.06 a share in 2006. Revenue fell 4.4%, to $10.9 billion from $11.4 billion, as it shifts from traditional telephone networking equipment to higher-margin wireless products and other technologies. The new restructuring plan will cut Nortel’s workforce by 6%, and shift more operations overseas. It will cost roughly $525 million, but should cut annual expenses by $300 million....
BANK OF MONTREAL $54.32, Toronto symbol BMO, has announced several charges that will cut its earnings when it reports results for its first fiscal quarter ended January 31, 2008. The charges will total about $325 million or $0.70 a share, and consist mainly of writedowns of asset-backed securities and higher loan loss provisions. The bank earned $2.9 billion or $5.66 a share before unusual items in fiscal 2007. Bank of Montreal has now pledged roughly $12 billion U.S. to support two of its structured investment vehicles holding asset-backed securities. The extra liquidity should help them dispose of these assets in an orderly manner. These assets have minimal exposure to U.S. subprime mortgages, and Bank of Montreal feels the risk of loss is low. While the possibility of further writedowns adds risk, Bank of Montreal remains well capitalized....
HOME CAPITAL GROUP INC. $39.51, Toronto symbol HCG, earned $2.59 a share in 2007, up 32.8% from $1.95 in 2006. Revenue grew 30.6%, to $368.9 million from $282.5 million. The company’s loan portfolio rose 21.5%, mainly due to strong demand for residential and commercial mortgages. Home Capital has no exposure to the U.S. mortgage market. Receivables on its Equityline Visa credit cards rose 40.2% in 2007. The strong results let Home Capital increase its dividend for the eighth time in the past five years. The new annual rate of $0.48 a share, up 9.1% from $0.44, yields 1.2%. Home Capital Group is a buy....
It was an unsettling week, but the market ended up in the middle of the range it has stayed in since its January 21 plunge. No one can predict these things consistently, but I still think we are much closer to a bottom than a top. To put it another way, if I had to choose between “buy” and ”sell”, I would definitely say “buy”. BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $28.28, Toronto symbol BA.UN, is beginning to realize the benefits of its plan to expand the availability and capacity of its high-speed Internet service. Internet subscribers grew 17.1% in the fourth quarter of 2007. This extra capacity has also helped Bell Aliant attract more business customers. Consequently, Bell Aliant’s earnings per share in 2007 rose 18.8%, to $2.53 a share from $2.13 in 2006. Overall revenue grew just 3.0%, to $3.4 billion from $3.3 billion, due to lower local and long distance revenue....
BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $28 (Toronto symbol BA.UN; Conservative Growth Portfolio, Units outstanding: 127.1 million; Market cap: $3.6 billion; SI Rating: Above average) has agreed to buy the publicly owned telephone system in Kenora, Ontario for $27 million. The price is equal to 39% of the $0.53 a unit (total $68.8 million) that Bell Aliant earned in the third quarter of 2007. As a city-owned business, the Kenora phone system did not have the resources to invest in new communication services, such as high-speed Internet access. Strong demand for these services should help Bell Aliant quickly recover the cost of this purchase. Bell Aliant is a buy....
ARBOR MEMORIAL SERVICES INC. $34 (Toronto symbol ABO.A) earned $1.94 a share from continuing operations in the fiscal year ended October 31, 2007, up 6.6% from $1.82 in the prior year. Revenue grew 7.4%, to $229.3 million from $213.5 million. Hold. NORTEL NETWORKS CORP. $13 (Toronto symbol NT) has settled a dispute with Vonage, a U.S.-based Internet phone company. Both companies accused each other of patent infringement. The deal does not include cash payments, but the two will share certain patents. Hold. SNC-LAVALIN GROUP INC. $45 (Toronto symbol SNC) has won a contract to design a liquefied natural gas (LNG) facility in Poland. The $10.6 million value of this deal is small next to SNC’s annual revenue of over $6 billion, but could lead to more contracts as interest in LNG grows. However, at over 30 times its projected 2007 earnings, SNC is still expensive in relation to its prospects. Hold....
FORDING CANADIAN COAL TRUST $37 (Toronto symbol FDG.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 147.9 million; Market cap: $5.5 billion; SI Rating: Average) is a major producer of metallurgical coal, a key ingredient in steelmaking. Its proven reserves should last 25 years. With further development, Fording’s reserves could last 100 years. Fording’s main asset is its 60% interest in the Elk Valley Coal Partnership, which operates six coal mines in British Columbia. Teck Cominco Ltd. owns the other 40% of Elk Valley, and operates the mines. Teck also owns 19.95% of Fording’s units, which gives it a 52% economic interest in Elk Valley.
Aims to unlock more of its value
Fording is now exploring strategic alternatives to enhance unitholder value, including the sale of its Elk Valley stake or the entire trust. Teck has a right of first refusal over any sale of Fording’s Elk Valley interest. However, a deal to sell Fording itself would not trigger this right....
TELUS CORP. (Toronto symbols T $46 and T.A $45; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 327.4 million; Market cap: $15.1 billion; SI Rating: Above average) plans to spend $1.9 billion on capital improvements in 2008, up $150 million or 8.8% from 2007. Most of the spending will go to expanding its high-speed wireless coverage and capacity in Alberta and British Columbia. Telus also plans to improve its high-speed Internet services. Better services will help Telus hang on to its current customers, and attract new ones. That will also help expand Telus’s earnings in 2008 to $3.65 a share, up 10.6% from the $3.30 a share it likely earned in 2007. The stock trades at 12.6 times the new estimate (12.3 times for the ‘A’ shares). That should help Telus raise its $1.80 dividend, which yields 3.9% (4.0% for the ‘A’ shares)....