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
SNC-LAVALIN GROUP INC. $30 (Toronto symbol SNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Average) is one of the world’s leading engineering and construction firms. It specializes in large-scale public works projects such as water treatment systems, highways and power plants. SNC is currently working on projects in over 100 countries. SNC typically builds a public facility, and agrees to operate it under a long-term concession contract. Concessions account for 30% of its revenue. SNC’s best-known concession is Highway 407, a toll highway north of Toronto. In May 1999, SNC paid $175 million for a 26.92% stake the highway, and the right to operate it for 99 years. SNC later cut its interest to 16.77%. Although Highway 407 is still losing money, its revenue is growing strongly and it should become profitable in the next few years. The company is now working on several new concession projects it hopes have the same potential as Highway 407. It’s building a new $2 billion transit line for the Vancouver 2010 Olympics, and owns a third of the company that will operate it for 35 years. SNC recently increased its ownership in Alberta’s AltaLink electricity grid, from 50% to 76.92%....
ROYAL BANK OF CANADA $49 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is taking advantage of the rising Canadian dollar to expand its operations in the United States, which now provide roughly 10% of its profit. For instance, it has just agreed to pay an undisclosed sum for American Guaranty & Trust, which administers trusts for over 1,000 high net worth individuals. While the deal will have little impact on Royal’s earnings, it should help the bank’s U.S. wealth management operations compete with more-established firms....
ANDRES WINES LTD. $34 (Toronto symbol ADW.A; Income Portfolio, Consumer sector; SI Rating: Above average) has gained roughly 10% since it said it would split its stock on a 3-for-1 basis in October 2006. That should greatly improve the stock’s liquidity. Andres also plans to change its name to Andrew Peller Limited. Thanks to strong demand for premium wines, which generate higher profits than its regular brands, Andres increased its dividend for the first time since 1997, from $0.644 a share (pre-split) to $0.759. It now yields 2.2%. Andres Wines is a buy....
CANADIAN NATIONAL RAILWAY CO. $47 (Toronto symbol CNR; Conservative Growth Portfolio, Manufacturing & Industry sector; SI Rating: Average) operates a 19,200-mile rail system in Canada and 16 Midwestern U.S. states. Goods shipped include oil, coal, grain, forest products and manufactured goods. This wide product base cuts CN’s reliance on any one commodity. CN’s revenue rose from $5.7 billion in 2001 to $6.1 billion in 2002, partly due to the acquisition of two American railways. Revenue fell to $5.9 billion in 2003, but more acquisitions pushed revenue up to $7.2 billion in 2005. Expanding through acquisition is always risky, but these new railways broadened CN’s geographic reach. Restructuring costs cut CN’s profits from $1.21 a share (total $727 million) in 2001 to $0.91 a share ($553 million) in 2002. But profits rose steadily to $2.77 a share ($1.6 billion) in 2005....
MAPLE LEAF FOODS INC. $12 has moved down on fears that the high Canadian dollar would hurt pork exports to Japan. Rising fuel and other costs are also cutting into its earnings growth. But new facilities and equipment should improve its efficiency. A new share buyback plan will also help support the stock price. Buy. PETRO-CANADA $44 paid $30 million for oil sand leases adjacent to its MacKay River project in northern Alberta. The price is equal to 6% of the $474 million or $0.94 a share it earned before unusual items in the second quarter of 2006. The company aims to double MacKay River’s output by 2010. Buy. LOBLAW COMPANIES LTD. $51 will probably earn $3.23 a share in 2006, down 4% from 2005, as it continues to iron out problems with its new distribution network. The new system should cut Loblaw’s long-term costs and help it compete with Wal-Mart. But the stock will likely move sideways until earnings improve. Hold....
Falconbridge Ltd. (formerly Noranda Inc.) will be a hard stock to replace. We first recommended it in our April, 1995 issue. The Resources sector was depressed at the time, but we liked the stock for its high-quality reserves, steady cash flow and secure 5% dividend yield. We repeatedly recommended it and advised investors to stick with it for the low-risk Resources exposure it provided. The recent takeover of Falconbridge at $62.50 a share works out to a total return (including dividends) of 286.1%. Today’s ongoing Resource boom is bound to falter eventually, but your portfolio still needs Resources exposure. It may take years, but one day we expect to see Falconbridge-sized returns from a couple of our long-time favourites, Alcan and Agrium. ALCAN INC. $47 (Toronto symbol AL; Conservative Growth Portfolio, Resources sector; SI Rating: Average) is the world’s second-largest producer of aluminum, after U.S.-based Alcoa Inc. Canada accounts for about half of Alcan’s aluminum production, while the other half comes from operations in 14 other countries....
Our focus on high-quality stocks attracts an above average number of takeover offers. Besides Falconbridge, two more of our long-time favourites are now the target of buyout offers: INCO LTD. $85.50 (Toronto symbol N; Conservative Growth Portfolio; Resources sector; SI Rating: Average) is the world’s largest producer of nickel. It recently dropped a plan to merge with U.S.-based copper producer Phelps Dodge Corp. It now seems likely that an $86.00-a-share all-cash offer from Brazilian mining firm Companhia Vale do Rio Doce (CVRD) will succeed. We first recommended Inco at $41 in our January, 1995 issue, and the CVRD offer works out to a gain of 109.8%....
IMPERIAL OIL LTD. $45 earned $0.85 a share in the three months ended June 30, 2006, up 63.5% from $0.52 a year earlier. If you disregard a one-time tax credit, Imperial’s second quarter profits would have grown 34.6%, to $0.70 a share. Revenue slipped to $6.7 billion from $6.8 billion, due to lower natural gas production and prices. Rising costs at Imperial’s proposed oil sands and gas pipeline projects could hurt future growth. Hold. TELUS CORP. $52 continues to benefit from growing demand for wireless services. In fact, it now has more wireless customers than traditional telephone customers. Thanks to a 14% jump in the number of wireless subscribers in the past year, Telus earned $0.69 a share before one-time items in the second quarter of 2006, up 32.7% from $0.52 a year earlier. Revenue rose 7.0%, to $2.14 billion from $2.0 billion. Buy. BANK OF MONTREAL $64 is the first Canadian bank to receive permission to provide banking services in Beijing using China’s local currency. That will let it offer a broader array of services, and give it an advantage over other foreign banks. Buy.
TRANSCONTINENTAL INC. $19 (Toronto symbol TCL.A; Aggressive Growth Portfolio, Consumer sector; SI Rating: Average) is a major North American commercial printing company with three main divisions: the Information Products division prints books, newspapers and magazines (30% of its revenue); the Marketing Products unit prints advertising materials and provides direct marketing services (45%); and the Media division publishes newspapers and magazines (25%). These businesses are highly cyclical. However, Transcontinental gets over half of its revenue from businesses less exposed to ad spending, such as books and newspaper printing. Also, much of its advertising revenue comes from less cyclical industries like food, health and personal care products.
Acquisitions fueled revenue growth
Transcontinental has expanded its direct marketing operations recently, mainly through the purchase of two U.S.-based direct marketing firms for $255.7 million. These and other acquisitions helped increase Transcontinental’s revenue, from $1.8 billion in 2001 (fiscal years end October 31) to $2.2 billion in 2005....
TORSTAR CORP. $20 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; SI Rating: Above average) is a Canadian leader in newspaper publishing. This industry lives off ad sales and faces growing competition, internally and from the Internet. Torstar moved to cut its reliance on newspapers last year, when it paid $283 million for a 20% stake in Bell Globemedia, which controls CTV, specialty TV channels and The Globe and Mail. Bell Globemedia later arranged to buy rival TV and radio broadcaster CHUM Ltd. Torstar agreed to invest an extra $100 million in Bell Globemedia, to maintain its 20% interest. This is a big commitment for Torstar, which earned just $0.33 a share (total $25.6 million) in the second quarter of 2006, down 28.3% from $0.46 a share ($36.1 million) a year earlier. Weak ad revenue at the flagship Toronto Star offset gains at its community newspapers. Revenue fell 3.1%, to $390.3 million from $402.9 million....