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
This past year brought richly rewarding takeovers of several of our long-time favourites including Falconbridge, Inco, Fairmont and Sleeman. As a result, you may face a substantial capital-gains tax bill. Before yielding to the year-end tax-loss selling urge, keep in mind that it’s always a mistake to sell good stocks at this time of year. Tax-loss selling sometimes drives share prices down way too far. Prices of good stocks often snap back in January. Note that if you sell next year, you can carry your loss back to offset capital-gains taxes you’ve paid since 2003, or carry it forward indefinitely. If you need to sell in 2006 (possibly to offset capital-gains taxes you paid in 2002), December 22 is this year’s tax-loss selling deadline for Canadian investments. The deadline for selling U.S. securities is December 26....
We picked Agrium as our “Stock of the Year” in 2005, and again in 2006. We liked its low-cost operations, and its low p/e (then about 10). Although the company’s exposure to natural gas prices adds to its volatility, recent acquisitions have helped cut its risk. It should also benefit from increasing worldwide demand for food, and for renewable fuels. That’s why we are once again picking Agrium as our Stock of the Year for 2007. AGRIUM INC. $36 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; SI Rating: Average) is a leading producer of nitrogen, phosphate and potash fertilizers and crop protection products. It has 12 major production facilities in Canada and the United States, and one in Argentina that it operates through a joint venture....
ROYAL BANK OF CANADA $53 has invested $25 million U.S. for a 30% stake in a new joint venture that will offer asset management services in China. The amount is just 2% of its latest quarterly earnings. But the deal gives Royal a low-risk way to increase its exposure to a fast-growing market. Buy. EMERA INC. $22 earned $0.18 a share in the third quarter of 2006, up 28.6% from $0.14 a year earlier, due to higher electricity rates and profits from the resale of natural gas from the offshore project near Sable Island. Revenue fell 3.1%, to $272.4 million from $281.1 million, due to the temporary shutdown of a large industrial customer. This customer aims to re-start its operations in the fourth quarter. Best Buy. TRANSCANADA CORP. $38 continues to expand its electrical power operations, which have higher growth prospects than its gas pipeline business. Thanks mainly to higher profits at the power unit, earnings before unusual items in the most recent quarter rose 4.2%, to $0.50 a share from $0.48. Revenue grew 23.3%, to $1.85 billion from $1.5 billion. Best Buy.
CANADIAN PACIFIC RAILWAY LTD. $64 (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; SI Rating: Above average) provides freight service through a 13,500- mile rail network between Montreal and Vancouver. It also operates in the U.S. Midwest and Northeast through subsidiaries. Alliances with other rail companies extend its reach to Mexico.
Diverse cargo cuts risk
CP transports a wide variety of products, such as grain, coal and manufactured goods. That helps cut its reliance on a single industry or customer....
TIM HORTONS INC. $34 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; SI Rating: Extra risk) earned $51.8 million in the third quarter of 2006, down 21.9% from $66.3 million a year earlier. Per-share profits fell 34.2%, to $0.27 from $0.41, due to more shares outstanding. The latest results included $3 million in extra costs related to problems at a new distribution center in Ontario. The year-earlier earnings included $6.1 million in foreign exchange gains. Sales rose 7.1%, to $413.6 million from $386.1 million; same-store sales rose 5.9% in Canada, and 9.2% in the United States. A plan to equip its Canadian stores to accept credit and debit cards should spur sales in 2007....
TORSTAR CORP. $18 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; SI Rating: Above average) earned $0.10 a share in the third quarter of 2006, down 66.7% from $0.30 a year earlier. If you exclude the negative impact of foreign currency movements, restructuring costs and gains from asset sales, earnings were unchanged. Revenue fell 3.1%, to $366.2 million from $378.0 million, mostly due to lower sales at its Harlequin book publishing subsidiary and The Toronto Star flagship newspaper. The stock has dropped 20% in the past six months, due to concerns that the company took on too much debt to buy 20% of Bell Globemedia, which owns The Globe and Mail, CTV Television and several popular specialty channels. But Torstar can use these TV channels to draw traffic to its own web sites. The company could also unlock a big part of its value by spinning off Harlequin to its shareholders as a special dividend....
NORTEL NETWORKS CORP. $2.22 (Toronto symbol NT; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Speculative) plans to consolidate its outstanding shares on a 1-for-10 basis on December 1, 2006. Most institutional investors avoid stocks that trade under a certain figure, say $5 a share, so this move will make it easier for them to buy Nortel stock. Thanks to cost controls, Nortel cut its losses in the third quarter of 2006, to $0.02 a share (pre-consolidation) from $0.03 a year earlier (all amounts except share price in U.S. dollars). Revenue rose 20%, to $3.0 billion from $2.5 billion. Sales could slow in the next year or so as demand for its older equipment falls faster than orders for its new products. But profit margins should rise as the company realizes more of the benefits of its restructuring plan. Nortel is a buy for aggressive investors.
When Ottawa moved to put income trusts on an equal footing with corporations, it exempted REITs. We’ve recommended these two REITs for some time, mainly because of the quality of their assets. We continue to view both as buys. RIOCAN REAL ESTATE INVESTMENT TRUST $25 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Average) owns all or part of 203 large, outdoor suburban malls across Canada....
TECK COMINCO LTD. $86 (Toronto symbol TCK.B; Conservative Growth Portfolio, Resources sector; SI Rating: Average) is the world’s secondlargest supplier of zinc, behind Xstrata plc. Manufacturers add zinc to steel to prevent it from rusting. Zinc accounts for about a third of Teck’s profits. The company is also a leading producer of lead, copper and gold, and owns 40% of the Elk Valley Coal Partnership, which supplies metallurgical coal to steelmakers. Fording Canadian Coal Trust owns the other 60% of Elk Valley. Earlier this year, Teck failed in its bid to merge with nickel producer Inco Ltd. Consequently, Teck converted its Inco convertible debentures into shares, and tendered the stock to the Brazilian mining firm that acquired Inco. That generated a pre-tax gain of $135 million....
MANITOBA TELECOM SERVICES INC. $44 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; SI Rating: Average) earned $0.52 a share from continuing operations, down 14.8% from $0.61 a year earlier. If you disregard restructuring costs, profits grew slightly. Revenue fell 5.9%, to $477.9 million from $507.7 million, due to strong competition in the local and long distance businesses. The stock fell 10% on news of Ottawa’s new plan to tax income trusts, but quickly recovered. That’s because bigger phone companies like BCE and Telus could use the accumulated losses of Manitoba Tel’s struggling Allstream business telecom division to cut their own tax bills. These losses expire in 2014. The company’s $2.60 dividend (5.9% yield) is also now more attractive to income-seeking investors. Manitoba Telecom is a buy.