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
TECK COMINCO LTD. $83 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 215.8 million; Market cap: $17.9 billion; SI Rating: Average) is the world’s largest producer of zinc, which helps prevent steel from rusting. Zinc accounts for a third of Teck’s revenue. The company is also a major producer of copper and gold. Thanks to the huge jump in metal prices in recent years, Teck’s revenue nearly tripled, from $2.2 billion in 2002 to $6.5 billion in 2006. Earnings before unusual items shot up from $0.15 a share (total $30.0 million) in 2002 to $10.43 a share ($2.3 billion) in 2006. Cash flow per share soared from $1.27 to $11.95. (These figures do not reflect a planned 2-for-1 stock split in May 2007.)
New projects help cut risk
Teck is using its strong balance sheet (it has cash of $5.4 billion or about $25.00 a share, while long-term debt of $1.5 billion is just 0.2 times equity) to diversify into other areas of the resources industry. It’s particularly interested in projects where its mining expertise can help cut costs....
THE WESTAIM CORP. $0.91 (Toronto symbol WED; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 94.0 million; Market cap: $85.5 million; SI Rating: Speculative) has dropped sharply in the past year, mainly due to poor clinical results for a new skin treatment developed by 74.8%-owned Nucryst Pharmaceuticals Corp. (Toronto symbol NCS). Based on current prices, this subsidiary now accounts for $0.53 of Westaim’s share price. The company’s other subsidiary, wholly owned iFire Technology Corp., is still working on its new flat-panel display technology. However, falling prices for flat-panel TV sets have hurt iFire’s ability to find a partner willing to help commercialize its technology. Westaim is debt free, and had $0.67 a share in cash at the end of 2006. It could still unlock some of its value by selling these subsidiaries or some of their patents....
BANK OF NOVA SCOTIA $53 (Toronto symbol BNS; Conservative Growth Portfolio, Finance sector; Shares outstanding: 993.0 million; Market cap: $52.6 billion; SI Rating: Above average) continues to expand its international operations, which supply a third of its earnings. It recently agreed to acquire a 24.99% stake in Thailand’s eighth-largest bank for $240 million, which is about 24% of the $1.02 billion or $1.01 a share it earned in its most recent fiscal quarter. The bank is also opening new offices in Malaysia and Turkey. Overseas operations like these, particularly with local partners, give Bank of Nova Scotia access to high-potential markets at moderate risk. International operations also cut its exposure to the Canadian economy and its heavy reliance on natural resources. Bank of Nova Scotia is a buy....
MDS INC. $22 (Toronto symbol MDS; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 121.9 million; Market cap: $2.7 billion; SI Rating: Average) has repurchased 15.8% of its outstanding common shares at $21.90 each under a Dutch Auction. The buyback cost MDS $499.3 million. To put that in context, the company lost $0.02 U.S. a share (total $2.0 million U.S.) from continuing operations in its most recent fiscal quarter. If you tendered your shares, Revenue Canada will treat $16.75 a share of your proceeds as a deemed dividend. Of that amount, $16.71 is an “eligible dividend”, which means it qualifies for the new enhanced dividend tax credit (45% gross-up). The remaining $0.04 qualifies for the old credit (25% gross-up). The buyback has helped spur MDS’s stock in recent weeks. But it will probably make little progress until MDS absorbs its recent acquisition of California-based Molecular Devices Corp., which makes devices and software that speed up drug research....
VERSACOLD INCOME FUND $10 (Toronto symbol ICE.UN; Aggressive Growth Portfolio, Consumer sector; Units outstanding: 40.6 million; Market cap: $415.0 million; SI Rating: Extra risk) operates 72 public refrigerated warehouses in Canada, the United States, Australia, New Zealand and Argentina. Farmers and major food companies use these facilities to temporarily store perishable foods. Versacold also offers transportation and logistics services. In December 2005, the company acquired the refrigerated warehouse operations of Peninsular & Oriental Steam Navigation Co. for $397.2 million. The purchase nearly tripled the fund’s assets, and greatly expanded its foreign operations. Versacold’s businesses outside of Canada now supply roughly 75% of its revenue and profit. We feel the purchase made sense. Demand for refrigerated warehouse space is growing, and its bigger size makes it easier for Versacold to pursue acquisitions, particularly in the fragmented U.S. market....
ALCAN INC. $62 (Toronto symbol AL; Conservative Growth Portfolio, Resources sector; Shares outstanding: 370.7 million; Market cap: $23.0 billion; SI Rating: Average) wants to double capacity at its smelter in Iceland, but local residents narrowly voted down the proposal due to environmental concerns. Alcan will probably redesign the project, since Iceland’s glaciers and thermal springs give it access to plenty of cheap electricity, a key requirement in aluminum production. Meanwhile, the British Columbia Supreme Court has ruled that the company is free to sell as much or as little power as it wishes from its power plant next to its smelter in Kitimat, B.C. Regulators had previously blocked Alcan’s plan to fund an upgrade of the Kitimat facility by selling excess electricity. Alcan will probably start work on the project by the end of 2007....
CANADIAN TIRE CORP. $78 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 81.5 million; Market cap: $6.4 billion; SI Rating: Above average) plans to expand its selling space in 2007 by 10%. Most of these new stores will use the company’s unique Concept 20/20 format, which makes it easier to stock faster-selling merchandise. Central customer service counters, wider doors and better signage also help encourage repeat visits. Canadian Tire aims to have over 40% of its stores operating under the Concept 20/20 format in 2007, up from 27% in 2006. The company should also profit from its entry into the banking business. It now offers a variety of financial services, including mortgage loans, credit cards and savings accounts. Like other retailers with banking subsidiaries, Canadian Tire will probably focus on Internet-based services, which cost less to administer than traditional branches. That should let the company offer more competitive interest rates than regular banks. The stock has gained 25% in the past year, but still trades at a reasonable 16.2 times the $4.82 a share it will probably earn in 2007. The $0.74 dividend yields 0.9%....
BANK OF MONTREAL $71 (Toronto symbol BMO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 500.8 million; Market cap: $35.6 billion; SI Rating: Above average) cut interest rates on mortgage loans to expand its market share last year. However, the strategy had mixed results. Due to rising loan defaults, the bank had to tighten its lending policies. It also placed more mortgage specialists in its branches. Bank of Montreal hopes that a recent restructuring of its branch network will improve the performance of its Canadian retail operations. Meanwhile, Bank of Montreal’s U.S. subsidiary, Harris Bank, may try to buy some of the assets of LaSalle Bank, a rival Chicago-based bank. LaSalle’s parent company may become a takeover target, and the new owners may try to sell some of its operations....
Our approach to investing focuses on high-quality companies with long histories of rising sales and earnings. From there, we classify stocks as “Conservative” or “Aggressive” depending on a variety of factors, such as the prospects of the industry it operates in and its ability to retain customers and attract new ones. We also take into account its exposure to certain regions and currencies. Here are three manufacturing companies from our Aggressive Growth Portfolio, although only two are buys right now. These stocks are still suitable for conservative investors, but we advise all investors to limit stocks like these to no more than a third of your portfolio. GENNUM CORP. $12 (Toronto symbol GND; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 35.8 million; Market cap: $429.6 million; SI Rating: Above average) makes chips and other equipment that let broadcasters store, manipulate and transport video signals without losing picture quality....
MANITOBA TELECOM SERVICES INC. $47 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 66.8 million; Market cap: $3.1 billion; SI Rating: Average) launched its TV service in 2003, which uses high-speed Internet technology to deliver TV signals over regular telephone lines. This business now has 27% of Winnipeg’s TV market, and should easily reach its goal of 35% by 2010. Bundling this service with other packages has also helped Manitoba Tel fend off strong competition from cable companies. The company will probably have to start upgrading its TV system in the next few years so it can handle more high-definition channels. But the costs should not impair Manitoba Tel’s ability to pay its $2.60 dividend, which yields 5.5%. Besides, adding new services such as video-on-demand and pay-per-view should attract new customers and expand revenues from current users....