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
BANK OF NOVA SCOTIA $46 (Toronto symbol BNS; SI Rating: Above average) has long been the most international of all Canada’s big five banks. Now it has received permission from Chinese banking regulators to convert its Shanghai office into a full retail branch. This new branch will focus on providing loans to import-export firms, in addition to accepting deposits and providing foreign exchange services. It will offer some personal banking services, but only to its current business customers. Although Bank of Nova Scotia has operated in China for over 20 years, it is the first Canadian bank to set up a retail branch in China. This will give Bank of Nova Scotia a “first-in” advantage over other foreign banks, particularly as China opens up more of its financial services market to foreign competition. Bank of Nova Scotia is a buy.
Canada’s top two railway stocks moved up sharply in 2005, as strong volume growth helped them overcome higher fuel costs. Lower production of coal and other commodities could cut into their revenue in 2006, but the payoff from recent investments in new locomotives and tracks should help their profits grow. We see Canada’s railways as portfolio cornerstones and we feel all Canadian investors should own a least one railway stock. CANADIAN NATIONAL RAILWAY CO. $92 (Toronto symbol CNR; SI Rating: Average) is Canada’s largest railway, with 19,300 miles of track in Canada and the United States. Goods shipped include forest products, petroleum and chemicals, and grain and fertilizers. In the third quarter of 2005, CN earned $1.47 a share (total $411 million), up 23.5% from $1.19 a share ($346 million) a year earlier. Most of the gain came from higher freight rates to offset rising fuel costs. Revenue rose 5.9%, to $1.8 billion from $1.7 billion....
THE WESTAIM CORP. $5.23 (Toronto symbol WED; SI Rating: Speculative) now owns about 71% of subsidiary Nucryst Pharmaceuticals Corp., following its initial offering of Nucryst shares to the public in December 2005. Nucryst will use most of the funds it raised to develop its patented burn and wound dressings, which beat traditional treatments at preventing infection. However, this is a highly competitive field, and success is by no means certain. In addition, Nucryst will probably need to raise more money and this will dilute the interests of current investors. Westaim also plans an eventual public offering for another subsidiary, iFire Technology Corp. iFire has just built a facility where it will test the feasibility of its flat panel display technology. The company claims that its process produces sharper, clearer displays than current technologies, and can cut manufacturing costs by up to 40%. Westaim is still a hold for aggressive investors.
MAPLE LEAF FOODS INC. $15 (Toronto symbol MFI; SI Rating: Average) has opened Canada’s first commercial biodiesel plant near Montreal. This facility converts animal fats and recycled cooking oils into a fuel that can power current diesel engines. Right now, the main customers for this product are mass transit systems and cruise ship lines. But the market for biodiesel is expanding, since it’s less toxic and easier to handle than regular diesel fuel. It also emits fewer harmful emissions. Maple Leaf’s stock has stayed in a narrow range in the past few months, as lower prices for some meat products have hurt its revenue growth. Fears of stronger competition from rival hog processing firms have also put pressure on the stock. But Maple Leaf’s acquisition of Schneider Corp. in 2004 should help it hang on to its leading market share. Maple Leaf Foods is a buy.
Oil prices have more than doubled in the past couple of years, due to various factors like growing Chinese demand, the Iraq war and a particularly vicious hurricane season this past year. Oil prices could keep rising and we continue to advise you to hold some oil and gas investments. However, energy prices are inherently volatile. After a rise like this, it’s a good idea to focus on well-established oil and gas stocks that can withstand the inevitable price setbacks. Here is our updated analysis of three of our long-time favourites. IMPERIAL OIL LTD. $119 (Toronto symbol IMO; SI Rating: Average) is Canada’s biggest producer of oil and natural gas. It also operates a nationwide chain of retail gasoline stations under the “Esso” banner. U.S.-based ExxonMobil Corp. owns 69.9% of Imperial. Production at many of Imperial’s mature properties in Western Canada is dropping, so it’s investing heavily in new sources of oil. It owns 25% of the massive Syncrude oil sands joint venture in Northern Alberta. Syncrude is now expanding and it’s hard to predict costs in complex projects like this. For instance, Syncrude’s latest upgrades will cost twice their original forecast....
Many investors think of a ‘stock of the year’ as a sure-fire pick that supposedly is bound to be among the year’s biggest winners. Some of our past selections have lived up to that billing, but that’s not what I expect of them. Instead, I look for the best current example of my favourite type of investment, which I call a ‘heads-you-win, tails-you-break-even’ situation. No investment comes with a true guarantee. (Government bonds guarantee you’ll get your money back, but they don’t guarantee what the money will be worth.) But a ‘heads-you-win, tails-you-break-even’ pick offers highly attractive odds. The idea here is that you won’t lose much if the investment proves disappointing, which is a constant risk in investing. But if things work out in your favour — as often happens with our recommendations — the return can be substantial....
When Wal-Mart and other big American retailers began moving into Canada in the 1990s, many Canadians assumed the worst for Canadian retail stocks. In the fall of 2000, in fact, some investors zeroed in on Canadian Tire as a tax-loss selling candidate. They dumped the stock at barely a quarter of current prices. We stuck with Canadian Tire and advised buying more, because we had a high opinion of the steps it was taking to counter this threat. Canadian Tire has since held on to its market share, and enjoyed huge gains in its profits and stock price. The company is still coming up with innovative ways to grow and keep costs down. We still see it as a top choice for conservative investors....
CAE INC. $8.90 plans to spend $630 million in the next six years on research aimed at improving its existing flight simulator technology, and to develop simulators for other uses such as emergency response to disasters. Ottawa has agreed to pay for 30% of these costs in exchange for a share of future royalties. Still, that’s a big commitment for CAE, which earned $38.6 million or $0.15 a share from continuing operations in the six months ended September 30, 2005. CAE is a buy. TRANSALTA CORP. $26 earned $0.20 a share before unusual items in the third quarter of 2005, up 17.6% from $0.17 a year earlier, due to fewer unplanned power plant interruptions. Although cash flow per share fell 3.5%, to $0.82 from $0.85, it’s still enough to cover the company’s capital expenditures and $1.00 dividend, which yields 3.8%. TransAlta is a buy. IGM FINANCIAL INC. $45 continues to gain from improving equity markets and mutual fund sales. Assets under administration in November 2005 grew 10.2%, to $91.6 billion from $83.1 billion at the end of 2004. That’s good news, since IGM bases its fees on the value of the assets in its custody. IGM Financial is a buy.
NOVA CHEMICALS CORP. $44 (Toronto symbol NCX; SI Rating: Extra risk) makes two types of industrial plastics. Ethylene/polyethylene, which accounts for 60% of its revenues, is used to make a variety of products such as packaging, plastic bags, appliances, electronics and plastic pipe. The other 40% of Nova’s revenue comes from polystyrene products, such as foam cups, plates and bowls. North America supplies 80% of its revenue. Nova needs large amounts of crude oil and natural gas to make its products, which leaves it vulnerable to rising oil and gas prices. This plus its heavy reliance on just two common industrial plastics would ordinarily limit our interest.
Location, contracts cut oil price risk
However, the company’s proximity to Alberta’s large gas fields cuts its risk. Nova also structures its sales contracts so that it can pass along most of its higher raw material costs to its customers....
BOMBARDIER INC. (Toronto symbols BBD.MV.A $2.43 and BBD.SV.B $2.42; SI Rating: Extra risk) lost $9 million in its third fiscal quarter ended October 31, 2005, compared with a profit of $10 million a year earlier (all amounts except share price in U.S. dollars). On a per-share basis, the company lost $0.01 compared with nil. The latest results included $25 million to restructure Bombardier’s railcar division; the year-earlier period includes $43 million in one-time charges. Bombardier delivered 74 aircraft in the latest quarter, up from 69 a year earlier. But revenue fell 8.3%, to $3.3 billion from $3.6 billion. That’s because it’s selling more business jets, which cost less than its larger regional planes. Revenue at the rail unit fell 21%, but orders more than doubled. The company is still deciding whether to develop a new, larger regional jet. That would cost about $2 billion, and help Bombardier compete with Brazil’s Embraer, its chief rival. However, demand for the new plane could be soft, as rising fuel and other costs have forced many airlines to cancel or postpone orders for new aircraft....