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
FORDING CANADIAN COAL TRUST $32 (Toronto symbol FDG.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 147.5 million; Market cap: $4.7 billion; SI Rating: Average) owns 60% of the Elk Valley Coal Partnership, which operates six coal mines in British Columbia and Alberta. Teck Cominco owns the other 40%, and manages the mines. Fording exports most of its coal to steelmakers in Asia. In the second quarter of 2007, Fording earned $0.72 a unit from continuing operations, down 24.2% from $0.95 a year earlier. Fording blamed the drop mainly on a 17% decrease in average coal prices. Revenue fell 9.0%, to $418.3 million from $459.8 million, and cash flow per share fell 22.6%, to $0.82 from $1.06. Despite the weaker earnings, Fording should be able to keep paying quarterly distributions of $0.65 a unit (8.1% yield). Its plan to focus on higher-quality coal may limit future volume growth, but should help it extract higher prices from customers. The recent sale of its industrial mineral operations also gives Fording cash to support the current distribution rate....
GREAT-WEST LIFECO INC. $35 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 892.2 million; Market cap: $31.2 billion; SI Rating: Above average) earned $0.61 a share (total $544 million) in the second quarter of 2007, up 17.3% from $0.52 a share ($461 million) a year earlier. Most of the gain came from its European operations. Revenue grew 3.1%, to $10.1 billion from $9.8 billion. Great-West also raised its dividend 7.8%. The new annual rate of $1.10 yields 3.1%. The company has $1.2 billion U.S. invested in the troubled subprime mortgage market. But less than 1% of that is rated non-investment grade, so any writedown will probably be minor. The recent $3.9 billion U.S. purchase of mutual fund investment manager Putnam Investments Trust will also cut Great-West’s exposure to the housing market....
BCE INC. $39 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 804.7 million; Market cap; $31.4 billion; SI Rating: Above average) has moved down since it accepted a $42.75-a-share takeover offer from a private group led by the Ontario Teachers’ Pension Plan. That’s partly due to concerns that the group may have trouble borrowing the cash it needs for the purchase. However, the group has already secured financing deals with several banks. BCE has also suspended its stock buyback program, which has put pressure on the stock. Assuming shareholders accept the offer at a special meeting on September 21, 2007, and communication regulators also approve, the group aims to complete the transaction in early 2008. Meanwhile, BCE will continue to pay quarterly dividends of $0.365 a share (3.7% yield)....
NORTEL NETWORKS CORP. $20 (Toronto symbol NT; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 436.9 million; Market cap: $8.7 billion; SI Rating: Speculative) is a leading supplier of voice and data equipment to telephone companies and other large organizations. After several restructurings, Nortel’s costs are now coming into line with its revenues. As part of this plan, Nortel will cut its research spending, from 17% of revenue in 2006 to 15% this year, which will help its profits. On the surface, that would seem to hurt its ability to develop new products. However, the cut reflects Nortel’s plan to spend less supporting older products. The company aims to devote 80% of its research spending on core and new products, up from 45% now....
A key part of our approach to investing is spreading your money out among the five economic sectors: Finance; Utilities; Consumer Goods & Services; Resources & Commodities; and Manufacturing & Industry. That way, you avoid overloading yourself with stocks that are about to slump simply because of industry conditions or changes in investor fashion. Generally speaking, stocks in the Resources & Commodities sector and the Manufacturing & Industry sectors are apt to expose you to above-average volatility, while those in the Finance and Utilities sectors involve below-average volatility. Consumer stocks are in the middle. Due to the recent market downturn, investors are now taking a closer look at Consumer stocks. But the Consumer sector is a two-tier market, where some stocks thrive while others stagnate. That’s why it pays to zero in on well-established companies with strong brands that are attractive in relation to current prices, like these three....
GENNUM CORP. $10 (Toronto symbol GND; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.8 million; Market cap: $358.0 million; SI Rating: Above average) has agreed to sell its struggling consumer headset product business to Swedish-based CellPoint Connect. Gennum will receive cash and CellPoint stock worth $2.3 million, plus a chance to earn an extra $1 million based on future sales. To put that in context, Gennum earned $0.9 million or $0.03 a share before writedowns in the three months ended April 30, 2007. The sale will let Gennum focus on its more profitable video and data communications operations. The company specializes in high-end equipment, so these businesses face less competition than the consumer headset division....
CANADA BREAD COMPANY, LTD. $60 (Toronto symbol CBY; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 25.4 million; Market cap: $1.5 billion; SI Rating: Above average) reported a 12.0% increase in sales in the second quarter of 2007, to $375.7 million from $335.5 million a year earlier. If you disregard acquisitions, sales grew 6%. However, earnings per share fell 6.7%, to $0.84 from $0.90, due to a 17% jump in wheat costs. The company’s tax rate also increased to 34.7% in the latest quarter from 26.4%, due to changes at its U.S. bakery operations. Maple Leaf Foods’ high degree of ownership hurts Canada Bread’s liquidity. But Maple Leaf will probably wait until it finishes its restructuring before taking Canada Bread private. Meanwhile, the stock trades at 16.9 times the $3.54 a share it will probably earn in 2007. The $0.24 dividend yields 0.4%....
ENCANA CORP. $62 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 755.4 million; Market cap: $46.8 billion; SI Rating: Average) gets about 80% of its total production from natural gas. The company’s oil sands projects in Alberta account for the remaining 20%. The company recently folded its oil sands operations into two joint ventures with U.S.-based ConocoPhillips. That sped up the development of these assets, and cut EnCana’s costs. Last year, EnCana considered converting its oil sands holdings into an income trust. But Ottawa’s move to tax trusts in 2011 killed that plan. It’s possible EnCana may simply hand out shares in this business to its shareholders....
One of the most powerful ways to succeed as an investor is to disregard market turbulence like today’s, in which there is a large random factor. Instead, buy companies with hidden assets such as high research spending, under-utilized real estate and brand names, and dominant market positions. It can take years before hidden or little appreciated assets begin to generate earnings for the company or capital gains for its investors. But eventually, hidden assets will pay off. In the meantime, they cut your risk of permanent loss. In July, takeover rumours helped push CP Rail up to a new all-time peak. A potential bidder saw CP’s land holdings as a hidden asset. Skeptics point out that this land is beneath railway tracks, and unsuitable for residential housing. However, warehousing is another story. Pessimists also overlook the hidden value of CP’s cost-cutting plan, and its key role in Canada’s economy. Both fuel earnings growth and cut risk....
As I said in our July 27 Hotline, the market downturn that got going that week could carry on till October and knock another 5% to as much as 15% off the market indexes. I still feel the damage will be greater in speculative areas, where some prices have risen out of proportion to value. Before the setback ends, however, some investors will dump perfectly good stocks out of overblown fears for their future. CANADIAN IMPERIAL BANK OF COMMERCE $87 (Toronto symbol CM; Conservative Growth Portfolio, Finance sector; Shares outstanding: 337.5 million; Market cap: $29.4 billion; SI Rating: Above average) provides an example....