DIVIDENDS MAY NOT BE GALMOROUS BUT THEY PAY THE BILLS
There is little joy in the market these summer days of 2012. Heat waves are prevalent in many parts of the country whereas in other parts of the world heavy rains and floods are inflicting residential and industrial damage. Trying to beat the heat or keep ones head above water is a distraction to those trying to keep their financial house in order.
The junior speculative arena has been hit hard and trying to pick a winner has been challenged by political unrest in countries like Argentina and Bolivia and major oil companies seeking pipeline right-aways especially in North American are being harassed by aboriginal groups or dissident citizens. Recent oil spills have raised many red flags fueling anti pipeline advocates. The nationalization of foreign operated mines in South America alerts investors as to the consequences of these actions. The buyer beware bell rings loud meaning one needs to scrutinize where the assets of companies assets are prominent.
The only topic I can comment on is dividend producing equities where monthly or quarterly payments are made with the hope for some capital appreciation or minimal downside movements. The one stock that comes up in my portfolio is Rogers Sugar Inc.(RSI-TSX). The company converted into a conventional corporation from an Income Fund in January 1, 2011. Previously Rogers Sugar Ltd. had merged with Lantic Sugar Limited to form Lantic Inc. than later became a separate operating unit with each company operating in various aspects of the sugar industry in Canada.
The companies are the leading refiner, processor, distributor of sugar products with two sugar processing facilities, a cane sugar refinery in Vancouver, B.C. and a sugar beet producing facility in Taber, Alberta. Lantic operates a cane sugar refinery in Montreal, Quebec. The company's sugar products are marketed primarily under the 'Rogers' trade name and include cube, yellow and brown sugars, liquid sugars, specialty sugars and syrups.
In 2009 RSI traded at $2.90 and in 2011 it charted up nicely to the $5.10 range and then moved up smartly to $6.05 in mid-July. And to sweeten the pot Rogers' pays a handsome 5.95% dividend. If all stocks charted like Rogers we would have a lot of happy investors. The company is not totally dependent on imported cane as southern Alberta produces an equivalent beet sugar product that is as sweet as cane. Sugar consumption has many applications although reduced human intake is recommended. Coka Cola and Pepsi are huge consumers of sugar as are bakeries and ice cream makers. Artificial equivalents appeal to weight conscious joggers and bikers but some people still like the real thing.
My next dividend experience is nothing sweet but very eatable. Boston Pizza Royalties Income Fund Units (BPF.UN-TSX) is a franchise-driven casual dining restaurant company and operates only three of the over 340 restaurants as corporate restaurants and found throughout Canada. It is a unique casual dining brand with the restaurant and sports bar concept with over 40 years of experience. I am not really a pizza fancier but I have never had a bad pizza from Boston and I can recommend to any Italian food lover – you always get good value at Boston. The stock trades at $18.00 in mid-July, up from around $12.50 in 2010 and around $13.50 in 2011 and pays a healthy 6.5% dividend. Again with a chart to lick your chops over. The company has only 14 and a half million shares issued.
Switching from food to something less digestible I like iron ore and one that pays a respectable dividend. Labrador Iron Ore Royalty Corporation (LIF.UN-TSX) is a Canadian corporation resulting from the conversion of Labrador Iron Ore Royalty Income Fund under an Arrangement effective July 1, 2010. It holds a 15.10% equity interest in Iron Ore Company of Canada (IOC) directly and through its wholly-owned subsidiary, Hollinger-Hanna Limited, and receives a 7% gross overriding royalty and a 10 cent per tonne commission on all iron ore products produced, sold and shipped by IOC. IOC is one of several iron ore producers from iron mines at Labrador City, Newfoundland and one of the largest iron ore producers and a leading global supplier of iron ore pellets and concentrates. IOC is owned by the Rio Tinto Group, the third largest mining company in the world. Since early 2011 the stock has bounced between 30 and 40 dollars and in early July was trading around $32.50.
The slowdown in the Chinese economy has put a damper on steel production and consumption and has affected most commodities from copper to lumber. Labrador Iron Ore pays a 3% dividend and in the third quarter of this year announced a regular 25 cent dividend and a special dividend of 12.5 cents for a total of 37.5 quarterly dividend.
We have gone from sugar and cheese/tomato pasta to iron ore. I have a few more dividend goodies up my sleeves but I am hoping that by next issue we will be seeing a turnaround and boring dividends will be replaced by some exciting juniors with an exciting graphite project or widget that grabs you. Happy investing and keep your head down on the first tee and enjoy the summer.