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
NOVA CHEMICALS CORP. $36 shut down a major plastics plant in Ontario last September for an upgrade. However, problems with new machinery kept the plant closed until just a few weeks ago. The company hopes to recover some of these extra costs from its equipment suppliers. Earnings should rebound in 2006, and the stock now trades at just 7.4 times the $4.23 U.S. a share it will probably make this year. Nova is a buy. THOMSON CORP. $43 earned $0.62 a share before unusual items in the fourth quarter of 2005, up 26.5% from $0.49 a year earlier (all amounts except share price in U.S. dollars). Revenue grew 4.4%, to $2.4 billion from $2.3 billion, largely due to strong demand for its electronic information products. The company also raised its annual dividend rate 10%, from $0.80 U.S. a share to $0.88 U.S. It now yields 2.4%. But the stock is still expensive in relation to its prospects. Hold. IMPERIAL OIL LTD. $109 plans to split its stock on a 3-for-1 basis in May 2006, subject to shareholder approval. That will improve the stock’s liquidity. However, Imperial’s investments in new oil sands projects could hurt its earnings. Its proposed Mackenzie Valley natural gas pipeline has also run into problems. Hold
BCE INC. $29 (Toronto symbol BCE; SI Rating: Above average) has struggled in the past few years due to increasing competition in its core telephone business, which supplies 40% of its revenue and half of its profit. It also suffers from a “holding company discount": the current price of the stock is less than the total value of its various assets (wireless, Internet, satellite TV, etc.). Selling or rearranging these assets would give BCE more cash and/or income, and let it focus on its core operations.
Older businesses go into new trust
BCE now hopes that several recent announcements will simplify its operations and spur the stock price. The latest is a proposal to form a new trust that will hold its rural telephone lines in Ontario and Quebec. The new trust will also hold the land-line business of 53.2%-owned Aliant Inc., which is the main telephone company in Atlantic Canada. BCE will own 73.5% of the new trust, but that will fall to 45% after it hands out some of these units to its owns shareholders as a tax-deferred distribution. The company will also assume control over Aliant’s wireless business, which will expand the geographic reach of it’s own wireless operations....
SNC-LAVALIN GROUP INC. $31 (Toronto symbol SNC; SI Rating: Average) earned $0.29 a share in the fourth quarter of 2005, up 45.0% from $0.20 a year earlier (all per-share amounts adjusted for a recent 3-for-1 stock split). If you exclude losses from its 16.77% stake Highway 407, a toll highway north of Toronto, per share earnings grew 20.8%. Revenue rose 9.1%, to $1.2 billion from $1.1 billion. SNC’s order backlog at the end of 2005 grew to $8.1 billion from $6.3 billion at the end of 2004. The strong results let SNC raise its quarterly dividend 31.3%, from $0.533 a share to $0.07. The new annual rate of $0.28 yields 0.9%. The stock has jumped five-fold in the last five years. But its high p/e of 33 exposes it to a sudden drop if the company reports a quarter of weak earnings. SNC-Lavalin is a hold.
ARBOR MEMORIAL SERVICES INC. $20 (Toronto symbol ABO.A; SI Rating: Average) earned $0.42 a share in its first fiscal quarter ended January 31, 2006, down 2.3% from $0.43 a year earlier. Revenue grew 5.6%, partly due to last year’s acquisition of an Ottawa-based funeral home operator. It’s also earning more investment income from cemetery pre-payments and deposits. Arbor Memorial Services is a buy for aggressive investors. MAVERICK TUBE CORP. $45 (New York symbol MVK; SI Rating: Extra risk) plans to spend $10.4 million to expand its tubular goods finishing facilities in Calgary (all amounts in U.S. dollars). That’s about 16.5% of the $63.2 million or $1.54 a share that it earned in the three months ended December 31, 2005. Demand for new pipelines is growing strongly, and this expansion should quickly pay off....
SLEEMAN BREWERIES LTD. $11 (Toronto symbol ALE; SI Rating: Average) earned $0.03 a share (total $539,000) in the three months ended December 31, 2005, down sharply from $0.23 a share ($3.9 million) a year earlier. Revenue fell 7.8%, to $49.6 million from $53.8 million, due to intense competition from smaller regional brewers that receive provincial subsidies. That lets them sell beer at much lower prices than larger brewers like Sleeman. Sleeman is now broadening its current cost cutting plan. Consequently, these moves will lead to a $2 million one-time charge in the first quarter of 2006. But the plan should save Sleeman $2.7 million a year, including $1.7 million in 2006. The stock will probably make little progress until the benefits of the restructuring materialize, or beer prices rise again. But Sleeman’s recent drop could make it a takeover candidate for a foreign brewer with the size to survive this price war....
MOLSON COORS CANADA INC. (Toronto symbols TPX.LV.A $79 and TPX.NV $79; SI Rating: Average) is a wholly owned subsidiary of Molson Coors Brewing Co., the world’s fifth-largest brewer by volume. Holders of exchangeable shares in Molson Coors Canada can swap them at any time for common shares of the parent, Molson Coors Brewing Company (New York symbol TAP), on a one-for-one basis. Now that Ottawa has eliminated foreign content limits inside registered accounts such as RRSPs, the company will probably convert its exchangeable shares to common in the next few years. The company recently sold 68% of Kaiser, Brazil’s second-largest brewer, for $68 million (all amounts except share price in U.S. dollars). Kaiser has lost money and market share in the past few years, so its sale removes a weight from Molson Coors’ future earnings. Molson Coors still owns 15% of Kaiser, which will let it profit from any upturn in the Brazilian beer market. It can also use Kaiser’s brewing and distribution operations if it decides to launch Coors Light or other top-selling brands in Brazil....
TRANSCANADA CORP. $34 (Toronto symbol TRP; SI Rating: Above average) gets most of its revenue from its gas pipeline systems, but most of its earnings growth in the past few years has come from the 23 electric power plants that it either owns or controls. In fact, TransCanada’s power operations supplied just 32% of its revenue in 2005, but 55% of its income. Thanks to strong gains at both of its main divisions, TransCanada’s profits from continuing operations in the three months ended December 31, 2005 rose 26.3%, to $0.48 a share from $0.38 a year earlier. The most recent quarterly earnings figure excludes a $0.24 a share gain on the sale of an asset. Revenue rose 20.0%, to $1.8 billion from $1.5 billion. One of TransCanada’s most profitable investments in the past few years is its 31.6% stake in four units of Ontario’s Bruce nuclear plant. This single investment accounted for 51% of the power division’s profits in 2005, up from 41% in 2004....
ENCANA CORP. $49 (Toronto symbol ECA; SI Rating: Average) has agreed to sell its natural gas storage operations for $1.5 billion (all amounts except share price in U.S. dollars). The sale will generate an after-tax gain of about $850 million. That’s roughly two-thirds of the $1.3 billion or $1.46 a share that EnCana earned before non-recurring items in the fourth quarter of 2005. This sale is the latest part of EnCana’s plan to sell non-core assets, and focus on projects with greater long-term growth potential, such as early stage natural gas fields and oil sands developments. Recent asset sales, including the gas storage business, should give EnCana $3.3 billion in cash. It plans to use the cash to pay down its long-term debt of $6.7 billion (42% of shareholders’ equity) and buy back more stock. Strong demand for drilling equipment and labour has driven up EnCana’s operating costs. Gas prices are also coming down from their 2005 peaks. Consequently, EnCana will spend about 12% less on capital upgrades this year than last, and concentrate its efforts on its most promising projects....
Deregulation in Canada’s power industry has helped fuel strong growth at many electrical utilities in the past few years. However, some power providers prefer regulation, since it virtually guarantees that they will earn a profit without the risk that deregulated plants face. It’s now common to find power companies that operate both types of plants. They’re also expanding to other parts of Canada and the world to cut their exposure to single region or regulatory board. Here are four top buys in the electrical utility sector. However, more conservative investors should probably choose Canadian Utilities and Emera, over Fortis and TransAlta....
CANADIAN TIRE CORP., LTD. $64 (Toronto symbol CTR.NV; SI Rating: Above average) is a good example of a Canadian retailer that has successfully dealt with the Wal-Mart threat. It closed older stores, and upgraded its checkout and inventory systems. Thanks to its new stores, which feature wider aisles, better signage and faster checkouts, Canadian Tire earned $1.30 a share before unusual items in the fourth quarter of 2005, up 17.6% from $1.10 a year earlier. It also raised its quarterly dividend 13.8%, from $0.145 a share to $0.165 a share. The new annual rate of $0.66 yields 1.0%. The company also plans to change its stock trading symbol, from CTR.NV to CTC.A, on May 8, 2006. Canadian Tire is a buy.