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
TRANSALTA CORP. $24 (Toronto symbol TA; SI Rating: Average) earned $0.35 a share in the three months ended December 31, 2005, up 9.4% from $0.32 a year earlier. However, if you disregard gains on the sale of assets, TransAlta’s per-share earnings in the quarter grew 52.6%, to $0.29 from $0.19. Cash flow per share rose 32.5%, to $1.03 from $0.78, while revenue grew 22.7%, to $810.1 million from $660.1 million. In the past few years, TransAlta has spent heavily building new plants and upgrading existing ones (capital spending peaked at $7.41 a share in 2001). Higher depreciation charges and write-offs cut its earnings, and raised fears that the company would have to cut its $1.00 dividend, which yields 4.2%. However, these are non-cash charges that had no affect on TransAlta’s cash flow. TransAlta’s heavy capital spending should pay off with fewer maintenance shutdowns in the next few years. That will let the company take advantage of rising power prices, although it will likely use any excess cash to pay down long-term debt (0.7 times equity) before raising the dividend....
AGRIUM INC. $28 (Toronto symbol AGU; SI Rating: Average) has raised its takeover offer for U.S. fertilizer distributor Royster-Clark Ltd. by 8.2%, to $387 million from $357.5 million. It originally offered $325 million in November 2005. If you include Royster- Clark’s debt, the overall value of this new deal is roughly $616 million (all amounts in Canadian dollars). To put that in context, Agrium earned $2.12 U.S. a share (total $283 million U.S.) in 2005 on sales of $3.5 billion U.S. Royster-Clark has now accepted the new offer, and is recommending that its investors tender their units. Agrium now aims to complete the purchase by the end of February. Royster-Clark’s 250 farm centres and 70 fertilizer-storage sites in the Midwestern and Southeastern U.S. should add $1 billion U.S. to Agrium’s annual sales. Agrium is a buy.
Many investors limit their holdings in the Finance sector of their portfolio to Canada’s big five banks. While we have a high opinion of the banks, and recommend that every investor own at least one of them, we also advise investors to look beyond them. Here are three non-bank financial services stocks that we see as buys for long-term gains. However, only two are suitable for conservative investors. GREAT-WEST LIFECO INC. $29 (Toronto symbol GWO; SI Rating: Above average) is Canada’s largest insurance company, with assets under administration of $174.1 billion. Power Financial Corp. owns 75% of the company’s stock....
We created our Successful Investor Hotline to keep you up-to-date on our recommendations, and tell you when they change. Now we’ve made our Hotlines available to you on the Internet, so you’ll never need to worry about missing a Hotline. As a subscriber, you can receive our Successful Investor Hotline every week (44 or more times per year) by phone or email....
Our three-pronged approach to investment success is particularly well-suited to times like the present, when one particular group of investments (in this case, Resources & Commodities stocks) is making great gains and leading the market higher. Here are our three keys to successful investing: #1. Invest mainly in well-established companies....
BOMBARDIER INC. $3.02 continues to win new railcar contracts. It has just agreed to supply French National Railways with $343 million U.S. worth of trains. That’s equal to about 2% of Bombardier’s annual revenue. However, demand for the company’s planes, particularly regional jets, remains soft. Hold. ARBOR MEMORIAL SERVICES INC. $22 earned $0.45 a share before unusual items in its fourth fiscal quarter ended October 31, 2005, down 10% from $0.50 a year earlier. Revenue fell 5.9%, to $50.9 million from $54.1 million. The recent acquisition of an Ottawa area funeral home should help earnings in 2006. Buy. FORDING CANADIAN COAL TRUST $42 paid a fourth quarter cash distribution of $1.60 a unit, down 11% from $1.80 in the third quarter. Customers are delaying new orders for coal until they use up their excess inventories. A shortage of tires for big mining trucks will also hurt production at its Elk Valley coal mine. However, these are temporary setbacks, and the new implied annual rate of $6.40 a unit still yields 15.2%. Buy....
AGRIUM INC. $27 (Toronto symbol AGU; SI Rating: Average) is one of the world’s largest producers of agricultural fertilizers, with 13 plants in Canada, the United States and Argentina. It also makes chemicals that manufacturers use to make a variety of industrial products, such as fiberglass insulation and fire retardants. North America supplies 80% of its sales, and 90% of its profit. Nitrogen-based fertilizers account for about two thirds of Agrium’s production. The company uses natural gas to make ammonia, the basic ingredient in more complex fertilizers.
Location keeps gas prices down
Natural gas accounts for 85% of the cost of producing ammonia, which makes Agrium vulnerable to rising gas prices. However, most of its ammonia plants are in Alberta, and long-term deals with local gas suppliers help cut this risk. It also uses hedging contracts to keep gas costs down. Consequently, in 2004 Agrium paid about 25% less than the average market price for gas....
FAIRMONT HOTELS & RESORTS INC. $49 (Toronto symbol FHR; SI Rating: Average) has rejected an offer from American billionaire investor Carl Icahn to buy 51% of the company’s common stock at $40.00 U.S. a share. Mr. Icahn, who owns 9.3% of Fairmont, may offer to buy all of it at a higher price if the company gives him access to certain non-public information. Meanwhile, Fairmont is talking with other potential bidders. Fairmont continues to pursue its long-term plan to sell hotels, and enter into long-term management contracts with the new owners. Managing hotels generates higher profits for Fairmont than owning them. Fairmont just sold a hotel in Hawaii for a pre-tax gain of $109 million U.S., which is equal to 83% of the $131.8 million U.S. or $1.66 U.S. a share that it earned in the first nine months of 2005. Fairmont also sold some surplus real estate in Toronto for a gain of $8.2 million Canadian....
TECK COMINCO LTD. $64 (Toronto symbol TEK.SV.B; SI Rating: Average) has formed a partnership with UTS Energy Corp. which spent $6.1 million for the right to explore a new oil sands property in Alberta. (Teck and UTS are also partners in the proposed Fort Hills mining project.) That’s a tiny investment for Teck, which earned $2.00 a share (total $405 million) in the third quarter of 2005. But deals like this expand the company’s involvement in a promising region and industry. Teck has soared in the past few months, as zinc prices moved from $1,200 U.S. a tonne in July 2005 to around $2,000 U.S. a tonne in early 2006. Prices could move higher, as an accident at China’s biggest zinc mine could force it to temporarily shut down. Spreading industrialization in China and other parts of Asia should also keep zinc prices high. Despite the recent rise, Teck still trades for just 12.0 times the $5.34 a share that it will probably earn in 2006....
We advise you to use caution when investing in income trusts, and to limit your trust investments to no more than one-sixth of your total portfolio. Many income trusts, particularly those that have been assembled and sold to the public as new issues in the past few years, come with hidden risks that can eventually hurt their profits and force them to cut their distributions. When that happens, unit prices plummet. In choosing income trusts to recommend, we look beyond high current yields and weigh the quality of a trust’s assets. In trusts as in stocks, it’s crucial to make sure you are investing in an attractive business with healthy long-term prospects and the ability to survive the inevitable setbacks that periodically come to every business....