Dividend News 2005
Sunrise said: "That is still only 3.14%. Subtract inflation and taxes at dividend rate, and not much is left compared to the salary and bonus of the CEO."
Well nothing much I can do about the salary and bonus of the CEO, although I'm sure it's excessive.
Although TD is not terribly appealing at a yield of 3.14%, I think it's the growth of the earnings (and what's passed through as dividends) going forward that matters = one would want it to be significantly higher than the rate of inflation.
I checked to see when I bought my TD shares. It was Jan. 22, 1993 @ $7.50. The dividend at the time was .38 a share, so a yield of ~5%. Twelve years later TD is ~$51 a share with a dividend of $1.60. (If I had bought a bond back in 1993 with a yield of 6% or 7%, where would I be now? Not at 6.8 times my original investment. I'm pretty sure of that.)
So even though the dividend at the front end of 5% presumably wasn't much better than the inflation rate at the time, as you can see it worked out very nicely. Will TD do as well in the next 12 years? My guess is: probably not.
Well nothing much I can do about the salary and bonus of the CEO, although I'm sure it's excessive.
Although TD is not terribly appealing at a yield of 3.14%, I think it's the growth of the earnings (and what's passed through as dividends) going forward that matters = one would want it to be significantly higher than the rate of inflation.
I checked to see when I bought my TD shares. It was Jan. 22, 1993 @ $7.50. The dividend at the time was .38 a share, so a yield of ~5%. Twelve years later TD is ~$51 a share with a dividend of $1.60. (If I had bought a bond back in 1993 with a yield of 6% or 7%, where would I be now? Not at 6.8 times my original investment. I'm pretty sure of that.)
So even though the dividend at the front end of 5% presumably wasn't much better than the inflation rate at the time, as you can see it worked out very nicely. Will TD do as well in the next 12 years? My guess is: probably not.
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Total ReturnAnyone recall the URLs of Kangas' site or Tom's?
Dividend Growth
I like dividends too
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And now Inco has reinstated a dividend of US10 cents a share, a dividend which had been halted early in 1999.
Dividends may rule but there's not much to drool over. I was looking at the yield of the Diamonds, which has been below 2% since 1997, at least until 2001 where the data goes until. Compare that to 5% in 1984 and f4 to 6% through most of the 80s, 6% in 1978 and 1979, 6%+ from 1948 to 1951, almost 7% in 1941, and a whopping 10.8% in 1931.
Dividends may rule but there's not much to drool over. I was looking at the yield of the Diamonds, which has been below 2% since 1997, at least until 2001 where the data goes until. Compare that to 5% in 1984 and f4 to 6% through most of the 80s, 6% in 1978 and 1979, 6%+ from 1948 to 1951, almost 7% in 1941, and a whopping 10.8% in 1931.
According to Watermouse, DIA is yielding around 2%. My guess is not worthwhile investing in stocks for a 2% dividend from a bunch of large, mature corporations.
Really I envy the Americans. They have a lot of stocks to choose from and a 15% tax rate on dividends. I don't think it would be that difficult to put together a portfolio of 10 to 20 stocks to produce a dividend yield of 4 to 4.5% = double or more the DIA yield, plus to pick the stocks in such a way as to offer a good probability for decent capital appreciation. The beaten down drug stocks, lots of cheapish bank stocks, some utilities, a phone co, who knows what other stuff...
I don't buy U.S. stocks any more, so I won't be worrying about it. If you own Canada, you already own the U.S. = the economies are so integrated, 85% of our exports go to the U.S. etc.
Really I envy the Americans. They have a lot of stocks to choose from and a 15% tax rate on dividends. I don't think it would be that difficult to put together a portfolio of 10 to 20 stocks to produce a dividend yield of 4 to 4.5% = double or more the DIA yield, plus to pick the stocks in such a way as to offer a good probability for decent capital appreciation. The beaten down drug stocks, lots of cheapish bank stocks, some utilities, a phone co, who knows what other stuff...
I don't buy U.S. stocks any more, so I won't be worrying about it. If you own Canada, you already own the U.S. = the economies are so integrated, 85% of our exports go to the U.S. etc.
Last edited by Fredrik on 20 Apr 2005 14:48, edited 1 time in total.
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I'd have thought that DVY/NYSE -- iShares Dow Jones Select Dividends Index -- would have had a considerably better yield than the Diamonds. However, it's only 3.07%: about 50% higher:
http://www.etfconnect.com/select/fundpages...asp?MFID=120729
http://www.etfconnect.com/select/fundpages...asp?MFID=120729
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Fredrik, interesting that you envy the Americans but don't buy U.S. stocks any more. Especially now that -- cross wood -- the foreign content limit being axed means you can load up on big U.S. dividend payers in your RRSP to your heart's content -- free of most of the tax and withholding tax constraints of a non-registered plan. If you don't like the Diamonds or the U.S. dividend ETF, then how about the iShares DJ US Utilities Sector? Not sure the yield but it's got to be higher than 2 or 3%.
Vivendi Universal Exchangeco, VUE on the TSE, last remains of the old Seagram, has reinstated a dividend at .6 Euros payable May 4th. ( Dividend was omitted in 2003 and 2004, last paid at 1 Euro in 2002. ) Well nice to get some money again. 1 Euro = C$1.613
BTW Dividends Rule!! (except when they get omitted)
BTW Dividends Rule!! (except when they get omitted)
Boomerbucks said: "Fredrik, interesting that you envy the Americans but don't buy U.S. stocks any more. Especially now... the foreign content limit being axed means you can load up on big U.S. dividend payers in your RRSP to your heart's content -- free of most of the tax and withholding tax constraints of a non-registered plan."
What I envied about the Americans was the breadth of dividend paying stocks they have to choose from compared to the slim pickins we have available these days in Canada and also the 15% tax rate brought in by Bush on dividends (although it's not straightforward and has a few quirks in it so everyone doesn't get the 15% plus there is still presumably state income tax to deal with).
From a macro view, what I don't like about the U.S. economy is the huge budget and trade deficits (with no end in sight) and the declining US$. Hard to imagine that such macro problems won't end up negatively affecting U.S. stocks in general.
Another consideration for me is that if I Kick the Bucket® some afternoon, there's some wacky U.S. estate tax on U.S. stocks held by Canadians. Who needs that? Not me!! (even dead!! ) O.K. there is some kind of exemption, so you calculate the U.S. stuff vs. total assets and then you get an equivalent percentage of the available exemption. Since it's an outrage to begin with, let em' stuff it.
Thirdly, the point I've made before that Canada is so integrated with the U.S. economy, that we already have the U.S. "covered" by owning Cdn stocks. I think that many of the foreign institutional investors in Europe and Asia don't even see "Canada" when it comes to investing, they just see "North America" as an investment zone.
So I made the decision a couple of years ago to downgrade USA holdings and replace them with China. I'm very slow at getting things done, but that is what I have been (slowly) doing. Starting from zero in May 2003, I now have more invested in China than the USA. BTW GDP growth in China Q1 2005 was 9.5% yoy!! So far at least, no regrets.
What I envied about the Americans was the breadth of dividend paying stocks they have to choose from compared to the slim pickins we have available these days in Canada and also the 15% tax rate brought in by Bush on dividends (although it's not straightforward and has a few quirks in it so everyone doesn't get the 15% plus there is still presumably state income tax to deal with).
From a macro view, what I don't like about the U.S. economy is the huge budget and trade deficits (with no end in sight) and the declining US$. Hard to imagine that such macro problems won't end up negatively affecting U.S. stocks in general.
Another consideration for me is that if I Kick the Bucket® some afternoon, there's some wacky U.S. estate tax on U.S. stocks held by Canadians. Who needs that? Not me!! (even dead!! ) O.K. there is some kind of exemption, so you calculate the U.S. stuff vs. total assets and then you get an equivalent percentage of the available exemption. Since it's an outrage to begin with, let em' stuff it.
Thirdly, the point I've made before that Canada is so integrated with the U.S. economy, that we already have the U.S. "covered" by owning Cdn stocks. I think that many of the foreign institutional investors in Europe and Asia don't even see "Canada" when it comes to investing, they just see "North America" as an investment zone.
So I made the decision a couple of years ago to downgrade USA holdings and replace them with China. I'm very slow at getting things done, but that is what I have been (slowly) doing. Starting from zero in May 2003, I now have more invested in China than the USA. BTW GDP growth in China Q1 2005 was 9.5% yoy!! So far at least, no regrets.
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Teck Cominco ( TEK.SV.B ) doubles dividend to $0.80/year.
Last edited by FrostedGlass on 27 Apr 2005 16:09, edited 1 time in total.
Beer is best served in a ... FrostedGlass
Duke Energy Canada Exchangeco, symbol DX, is increasing its dividend from U$1.10 to U$1.24 per annum, an increase of 12.7%. (The dividend actually is paid in the C$ equivalent amount at the time declared.)
Duke is also buying Cinergy, the old Cincinnati Gas & Electric, for $9 billion, in an all stock deal.
BTW Dividends Rule!!
Duke is also buying Cinergy, the old Cincinnati Gas & Electric, for $9 billion, in an all stock deal.
BTW Dividends Rule!!