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
TORONTO-DOMINION BANK $59 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) wants to double the size of subsidiary TD Banknorth Inc., which operates around 600 branches in the northeastern United States. This subsidiary supplies about 10% of TD Bank’s total revenue. Most of the growth will come from acquisitions that enhance TD Banknorth’s market share in New York, New Jersey and Connecticut. It also plans to triple its advertising spending, and focus on improving customer service. In the second quarter of 2006, TD Banknorth’s earnings fell 2.3%, mostly due to one-time charges related to the integration of recent acquisitions. Without these items, profits rose 17.6%....
NOVA CHEMICALS CORP. $35 (Toronto symbol NCX; Conservative Growth Portfolio, Manufacturing & Industry sector; SI Rating: Extra risk) plans to close a polystyrene plant in the UK. Writedowns and severance costs will cut Nova’s earnings by $43 million (all amounts except share price in U.S. dollars). The closure is part of the company’s plan to cut its annual costs by $65 million. To put these figures in context, Nova earned $108 million, or $1.30 a share in the second quarter of 2006. Nova Chemicals is a buy....
RIOCAN REAL ESTATE INVESTMENT TRUST $23 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Average) earned $0.20 a unit (total $39.6 million) from continuing operations in the three months ended June 30, 2006, up 11.1% from $0.18 a unit ($36.1 million) a year earlier. However, the year-earlier quarter included $5.0 million in writedowns and other charges. Cash flow per unit grew 2.9%, to $0.35 from $0.34, while revenue rose 2.7%, to $155.4 million from $151.3 million. RioCan’s big box style shopping malls continue to attract long-term tenants. Its occupancy rate in the most recent quarter rose to a record 97.3%. National chains and anchor tenants accounted for 83% of its rental revenue, which cuts its risk....
PENGROWTH ENERGY TRUST $26 (Toronto symbol PGF.UN; Aggressive Growth Portfolio, Resources sector; SI Rating: Average) produces oil and natural gas, mainly from mature properties in Western Canada. It also owns 8.4% of a pipeline that transports gas from offshore platforms near Sable Island to Nova Scotia. Pengrowth prefers to replenish its reserves with acquisitions instead of exploration, which adds to its risk. But Pengrowth’s focus on high quality properties offsets this risk. In fact, Pengrowth’s current reserves should last at least 50 years. Thanks to an aggressive acquisition policy and rising energy prices, revenue jumped from $406.4 million in 2001 to $955.3 million in 2005. Earnings fell from $1.24 a unit (total $88.2 million) in 2001 to $0.63 unit ($57.0 million) in 2002, but rose to $2.08 a unit ($326.3 million) in 2005. Cash flow per share fell from $2.93 in 2001 to $2.54 in 2002, but grew to $3.87 in 2005....
MANITOBA TELECOM SERVICES INC. $47 (Toronto symbol MBT; Conservative Growth Portfolio, Utilities sector; SI Rating: Average) fell to $37 in February 2006 over fears that losses from its Allstream business telecom unit would force it to cut its $2.60 dividend, which yields 5.5%. But the stock has gained 25% since then, as it appears its aggressive restructuring plan is beginning to pay off. In the three months ended June 30, 2006, the company earned $0.75 a share from continuing operations, unchanged from a year earlier. Revenue fell 2.4%, to $490.1 million from $502.2 million, as lower long distance and local service revenue offset strong gains from its wireless and high-speed Internet operations. Manitoba Tel is a buy.
LEGACY HOTELS REAL ESTATE INVESTMENT TRUST $8.75 (Toronto symbol LGY.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; SI Rating: Extra risk) spent $1.1 million in the second quarter of 2006 studying new initiatives aimed at improving its long-term growth, including new acquisitions and condominium projects. It may also sell some properties. That should help Legacy maintain or increase its annual cash distribution rate of $0.32 a unit, which yields 3.7%. To put these costs in context, Legacy’s earnings in the second quarter soared to $0.15 a unit (total $13.3 million) from $0.05 a unit ($4.6 million) a year earlier. Cash flow per unit rose 50%, to $0.36 from $0.24, while revenue grew 8.6%, to $225.9 million from $208.0 million. Increasing business travel is helping to offset a drop in tourists from the United States. Legacy is a buy.
Bonds provide investors with steady income, and preservation of capital. While there’s not as much room for interest rates to fall, higher rates could lead to major losses on fixed-income investments. In our opinion, most income-seeking investors are better off in high-quality, well-managed utility stocks, such as these four. In taxable accounts, these stocks provide roughly as much income as most long-term bonds, after the dividend tax credit. They also give investors the possibility of a capital gain....
Holding companies tend to trade for less than the value of their various pieces (‘holding company discount’). Still, despite the apparent bargain, we only recommend the holding company over its subsidiaries when we have a high opinion of all the subsidiaries. A good example is our longtime favourite Canadian Pacific Ltd. When it broke itself up into five new companies in 2001, we saw all of the new stocks as buys.
Power Corp., Toronto symbol POW, through subsidiary Power Financial Corp., Toronto symbol PWF, currently controls two of our long-time recommendations: Great-West Lifeco Inc. and IGM Financial Inc.
However, Power Financial also holds several European companies. We feel that weaker economic conditions in Europe expose Power Financial investors to more risk than either Great-West or IGM. Conservative investors are better off with these two instead of the parent. Both offer value, income and an excellent way to diversify the Finance sector of your portfolio.
GREAT-WEST LIFECO INC. $28 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is one of Canada’s largest insurance companies, with $191.3 billion in assets under administration. It sells its insurance products directly and through brokers to both individuals and groups. Power Financial controls about 75% of Great-West.
The company also provides wealth management and other financial services. Great-West gets roughly 50% of its profit from Canada, 30% from the U.S. and 20% from Europe.
Great-West’s revenues rose from $16.1 billion in 2001 to $23.9 billion in 2005, or 10.4% compounded annually. Much of that growth is due to Great-West’s 2003 purchase of rival Canada Life Financial Corp. for $7.2 billion in cash and stock.
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Power Corp., Toronto symbol POW, through subsidiary Power Financial Corp., Toronto symbol PWF, currently controls two of our long-time recommendations: Great-West Lifeco Inc. and IGM Financial Inc.
However, Power Financial also holds several European companies. We feel that weaker economic conditions in Europe expose Power Financial investors to more risk than either Great-West or IGM. Conservative investors are better off with these two instead of the parent. Both offer value, income and an excellent way to diversify the Finance sector of your portfolio.
GREAT-WEST LIFECO INC. $28 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; SI Rating: Above average) is one of Canada’s largest insurance companies, with $191.3 billion in assets under administration. It sells its insurance products directly and through brokers to both individuals and groups. Power Financial controls about 75% of Great-West.
The company also provides wealth management and other financial services. Great-West gets roughly 50% of its profit from Canada, 30% from the U.S. and 20% from Europe.
Great-West’s revenues rose from $16.1 billion in 2001 to $23.9 billion in 2005, or 10.4% compounded annually. Much of that growth is due to Great-West’s 2003 purchase of rival Canada Life Financial Corp. for $7.2 billion in cash and stock.
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AGRIUM INC. $27 has agreed to pay $47.5 million for Pursell Technologies Inc. (all amounts except share price in U.S. dollars), which specializes in coatings that help control the release of nitrogen-based fertilizers in the soil. It also paid $12.5 million for the rights to other technologies. To put these figures in context, Agrium earned $283 million or $2.11 a share in 2005. Controlled-release fertilizers generate higher profits than regular fertilizers, so this purchase should pay off quickly. Agrium is a Best Buy. SHAWCOR LTD. $18 is expanding its operations in Alberta after it won a $30 million contract to provide coating services to the builders of a new oil pipeline. The deal is small next to ShawCor’s annual revenue of $1 billion, but it should lead to more business in this fast-growing region. ShawCor is a buy. FPI LTD. $5.50 hoped to sell some of its idle fish processing plants in Newfoundland, but could not agree on a price. FPI now aims to improve the profitability of its remaining processing operations with new equipment and cost cuts. FPI is a hold....
CANADIAN UTILITIES LTD. $37 (Toronto symbol CU (old symbol CU.NV); Income Portfolio, Utilities sector; SI Rating: Above average) is one of Alberta’s leading suppliers of natural gas (940,000 customers) and electricity (211,000 customers). It also operates power plants in other parts of Canada, Australia, and the UK, and provides engineering and related services to other gas and power companies. The company is slowly shifting its focus to its regulated businesses, which supply about half of its revenue and income. While that limits its growth prospects, it greatly cuts its risk and helps provide it with more predictable cash flows.