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
GREAT-WEST LIFECO INC. $33 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) has agreed to pay an undisclosed sum for Indiana Health Network, Inc., which provides healthcare services to group and individual policyholders. The purchase enhances Great-West’s growing health insurance operations in the United States, and will immediately add to its profits. In the meantime, Great-West earned $0.54 a share in the third quarter of 2006, up 14.9% from $0.47 a year earlier, mostly due to strong gains at its European operations. If you exclude the impact of the higher Canadian dollar, which hurts earnings from Great- West’s non-Canadian businesses (roughly 50% of earnings), income in the most recent quarter would have grown 24%. Revenue rose 16.9%, to $9.0 billion from $7.7 billion. Ottawa’s plan to tax income trusts has spurred fresh investor interest in high-quality dividend-paying stocks like Great-West. The current $0.96 annual rate yields 2.9%....
Oil prices rose to close to $80 U.S. a barrel last summer, mainly due to tensions in the Mideast. But the price has dropped to below $60, as the slowdown in the United States economy cut demand and raised inventories. We’ve probably hit a new high plateau for oil prices, between $40 and $80. We feel conservative investors should have only modest commitments in oil and gas stocks. They should focus on well-established companies, such as these three. Their large reserves and diversified operations will let them profit from higher prices, and help shield them from the inevitable downturns. IMPERIAL OIL LTD. $42 (Toronto symbol IMO; Conservative Growth Portfolio, Resources sector; SI Rating: Average) is Canada’s largest oil company, with major operations in Alberta and the Northwest Territories. Oil accounts for over 70% of its production, while natural gas supplies the other 30%. Imperial also refines crude oil into gasoline and other petrochemicals, and operates over 2,000 gas stations under the “Esso” banner. ExxonMobil Corp. owns 69.6% of the stock....
Our standing advice on income trusts is to limit them to one-sixth of your portfolio or less. In addition, we mainly recommend trusts that come out of trust conversions aimed at improving shareholder value. We stay out of most new issues, trusts included. In our view, all too many new trust issues were callous attempts at cashing in on investor demand for anything with a high yield. These simple restrictions limited our readers’losses when the new trust rules came out. We think the damage is done, so we recommend the same trusts as before. Note that two of our trust buys are exempt as REITs from the new tax rules....
Beer sales have slowed down in the past decade, as many baby boomers drink less as they get older. Many boomers are also switching to premium wines and spirits. This has led to a consolidation trend in the brewing industry. Bigger breweries can afford to spend more on advertising to improve their market share. Their size also makes it easier for them to cut costs, and pass along higher commodity and packaging prices to customers. The merger of Molson and Coors two years ago gave both companies the size they needed to survive. Now that the merged company has finished the bulk of its restructuring, it is beginning to realize the benefits of the merger....
RIOCAN REAL ESTATE INVESTMENT TRUST $25, has raised its monthly cash distribution 2.3%, from $0.1075 a unit to $0.11. The new annual rate of $1.32 yields 5.3%. Buy. LEGACY HOTELS REAL ESTATE INVESTMENT TRUST $9.40 has agreed to buy a 398-room hotel in Calgary for $53.5 million. It will also spend a further $4 million on renovations. To put that in context, Legacy earned $13.3 million or $0.15 a unit in the second quarter of 2006. But the Calgary market is growing fast, and this purchase should add to its future cash flow. Best Buy. HART STORES INC. $5.30, earned $0.14 a share in its second fiscal quarter ended July 29, 2006, up 27.3% from $0.11 a year earlier. Sales grew 12.6%, to $39.4 million from $35.0 million, thanks to the strong performance of its five new Ontario junior department stores. It plans to open three more stores in Ontario in the third quarter. That would give Hart a total of 76 stores, including 10 in Ontario. Buy....
CANADIAN TIRE CORP. $69 (Toronto symbol CTC.A; Conservative Growth Portfolio, Consumer sector; SI Rating: Above average) is one of Canada’s best-known retailers. It operates 462 stores that specialize in automotive, sporting and home improvement goods. It also operates 259 gas stations, 59 PartsSource auto parts stores and 334 Mark’s Work Wearhouse casual clothing stores.
New stores fueled sales gains
In the mid-1990s, Canadian Tire began replacing its older stores with bigger, better-lit new stores designed to improve shopper traffic and satisfaction. In the first year, sales at these new stores are typically 70% higher compared to the old stores. These new stores also help Canadian Tire compete as big American retailers like Home Depot and Lowe’s expand their Canadian operations. Thanks to the success of this plan, sales grew from $5.4 billion in 2001 to $7.8 billion in 2005, or 9.6% compounded annually. Income rose at a compounded annual rate of 15.6%, from $2.23 a share (total $176.7 million) in 2001 to $3.98 a share ($330.1 million) in 2005....
DUNDEE CORP. $52 (Toronto symbol DBC.A; Aggressive Growth Portfolio, Finance sector; SI Rating: Average) has gained nearly 60% in the past three months, as rising real estate and resources prices pushed up the value of Dundee’s investment portfolio. In fact, this portfolio had a market value of $28.24 per Dundee share at June 30, 2006, excluding its consolidated subsidiaries. That means you can buy Dundee’s wealth management businesses, which generates roughly 75% of its revenue and operating profits, for around $24 a share. In the three months ended June 30, 2006, Dundee earned $1.38 a share, up sharply from $0.16 a year earlier. Most of the increase came from gains Dundee realized on the sale of shares by a subsidiary. Revenue rose 38.6%, to $246.8 million from $178.1 million. Dundee recently began offering retail banking services, such as savings accounts and mortgages. This is a highly competitive field. But Dundee will sell these products through financial planners instead of branches, which should keep its costs down....
PETRO-CANADA $45 (Toronto symbol PCA; Conservative Growth Portfolio, Resources sector; SI Rating: Average) has delayed a final decision on its proposed 55%-owned Fort Hills oil sands project until mid-2008. The company now feels it will cost $2.0 billion to convert its refinery in Edmonton to handle the tar-like output, up 25% from a earlier estimate of $1.6 billion. To put that in context, the company earned $526 million or $1.02 a share from continuing operations in the first half of 2006. We feel this is a prudent move, since it will give Petro-Canada a better idea of the final cost. Lower oil prices could also slow down other oil sands developments, and cut the cost of steel and labour....
SHAWCOR LTD. $19 (Toronto symbol SCL.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Average) has dropped its plan to acquire Garneau, Inc. due to regulatory concerns that the deal would give ShawCor too much control over Alberta’s pipeline coating industry. Garneau would have only accounted for a small portion of ShawCor’s assets, so scrapping the takeover will let the company focus on other ways to expand. The stock got as high as $22 in May 2006, but has moved down as investors worry that lower oil prices will cut demand for ShawCor’s services. But oil prices will likely stay above historical levels indefinitely, and ShawCor’s strong reputation should help it win more pipecoating contracts. ShawCor is a buy for aggressive investors.
MAPLE LEAF FOODS INC. $13 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; SI Rating: Average) is a leading producer of fresh and frozen meat products. The company also supplies animal feeds to farmers, and owns 87.5% of Canada Bread. Overseas customers account for 30% of Maple Leaf’s sales. The high value of the Canadian dollar makes Maple Leaf’s products more expensive in foreign countries, which has hurt its sales. Rising inventories of frozen meat products, particularly in Japan, have cut demand and prices. Consequently, sales in the second quarter of 2006 fell 6.3%, to $1.5 billion from $1.6 billion a year earlier. Earnings fell 36.0%, to $0.16 a share (total $21.2 million) from $0.25 a share ($33.2 million)....