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
HART STORES INC. $5.35 (Toronto symbol HIS; Aggressive Growth Portfolio, Consumer sector; SI Rating: Speculative) has successfully expanded into Ontario, and now has 10 junior department stores there. Thanks partly to these new stores, profits in its third fiscal quarter ended October 28, 2006 rose 6.7%, to $0.16 a share from $0.15 a year earlier. Sales grew 10.0%, to $45.0 million from $40.9 million. The company should earn $0.55 a share in its current fiscal year, and the stock trades at 9.7 times that estimate. The $0.10 dividend yields 1.9%....
NOVA CHEMICALS CORP. $33 (Toronto symbol NCX; Conservative Growth Portfolio, Manufacturing & Industry sector; SI Rating: Extra risk) has moved down in the past few months, mostly due to fears that a slowdown in the economy will hurt plastic prices. Nova also had to temporarily shut down its big plant in Corunna, Ontario due to an accident, which hurt its profits. Nova’s shares now trade at 18.1 times the $1.57 U.S. a share that the company probably earned in 2006. But thanks to a major cost-cutting plan, including merging its money-losing European foam-cup operation with a rival producer, Nova’s earnings could rise to about $3.10 U.S. in 2007, for a p/e of just 9.2. Nova Chemicals is a buy.
GREAT-WEST LIFECO INC. $34 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is Canada’s largest insurance company, with assets under administration of $197.5 billion. Power Corp. of Canada, through subsidiary Power Financial Corp., controls about 70% of Great-West’s shares. In Canada, the insurance business is mature and concentrated among major insurers and the big five banks. While the strong economy has spurred demand from employers for group insurance, demand for individual policies is sluggish....
THE THOMSON CORP. $47 (Toronto symbol TOC; Conservative Growth Portfolio, Consumer sector; SI Rating: Above average) has mainly stagnated as an investment in this decade, as it steadily sold off its print-based businesses, to focus on electronic information services. As part of this strategy, it now wants to sell its educational operations. We have a high opinion of Thomson’s business strategy. For a number of years we advised against new buying, however, because we felt the payoff would be slow to come. Now it seems a little closer. The stock still seems somewhat expensive at 21.8 times the $1.85 U.S. that it is likely to earn in 2007. But it is entrenched as the leader in a number of highly attractive electronic publishing businesses. We now view Thomson as a buy for patient investors.
NORTEL NETWORKS CORP. $30 (Toronto symbol NT; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Speculative) was extraordinarily successful in the late 1990s with its telecom, network and Internet expertise. It crashed early in this decade with the deflating of the Internet boom. Now it hopes to prosper again by focusing on WiMax, a new wireless communications platform that is faster and covers more area than the current Wi-Fi standard. Many cellular service providers plan to upgrade their networks to WiMax in the next few years. Nortel recently lost out on a contract to supply WiMax equipment to a major U.S. wireless company. This will probably cut Nortel’s 2007 earnings by $0.04 U.S. a share. Nortel should still earn $0.70 U.S. this year, and the stock trades at 36.9 times that forecast. But the outlook for WiMax remains bright, and should provide Nortel with plenty of profit opportunities. Nortel is a buy, but only for aggressive investors.
We’ve generally stayed out of Canadian bank stocks other than the big five, and we haven’t missed much. However, we have had some successes with non-bank financials like Dundee. DUNDEE CORP. $51 (Toronto symbol DC.A (old symbol DBC.A); Aggressive Growth Portfolio, Finance sector; SI Rating: Average) provides wealth management services and sells mutual funds through 61%-owned Dundee Wealth Management Inc. It has gained from its activities and investments in junior resources. Dundee has launched a new retail banking operation, Dundee Bank of Canada, to provide loans and a variety of banking services and loans. Dundee plans to keep costs down by offering these services through financial planners, instead of physical branches....
Recently a friend asked, “What do you think of the idea that as the baby boomers retire, they will cut way back on their consumer spending and that this will usher in a lengthy recession?” It seems to me that this is the kind of prediction you make when you take a narrow view of a wide topic. The oldest boomers are now hitting age 60 and have begun to retire. The most immediate impact here is to drive down the jobless rate, particularly in well-paid, high-level jobs that allow the luxury of early retirement....
Investors have generally under-estimated the big five Canadian bank stocks for at least the past 33 years, which is when I started paying attention to them. As a result, the banks have been among the market’s top long-term performers throughout that period, while staying reasonably priced in relation to earnings and dividends. That’s a highly attractive combination. Banks do go through deep setbacks from time to time. But that’s a risk with any stock. The difference is that the banks play a central role in Canada’s economy. When economic setbacks end, they go on to thrive anew and outdo their previous successes. North America economic growth could fall from 3% in 2006 to 2.5% in 2007. That could hurt loan demand and raise loan defaults. But the banks have strengthened their loan portfolios in the past few years, and are doing a better job of controlling costs....
TRANSCANADA CORP. $39 (Toronto symbol TRP; Conservative Growth Portfolio, Utilities sector; SI Rating: Above average) has agreed to buy a natural gas pipeline system that transports gas from Northern Texas and the Gulf of Mexico to several Midwest states for $3.4 billion U.S. The deal also includes several gas storage facilities. This is a sizeable purchase for TransCanada, which earned $1.60 a share (total $782 million) in the first nine months of 2006. It has just $342 million ($0.70 a share) in cash, so it will have to borrow the money it needs. To help maintain its high credit rating and keep interest costs down, TransCanada will probably issue about $1 billion in new common shares. That would increase its number of shares outstanding by 5%....
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