Friday, February 26, 2016

Dividend Growth Investing at Work - Banking on Canadian Dividends


Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of said companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!  I mean who doesn't like getting a raise for doing nothing?

Yesterday the Board of Directors at Toronto-Dominion Bank (TD) approved an increase to their quarterly dividend.  The new dividend rate is $0.55 which is a solid 7.84% increase from the previous payout of $0.51.  In their home currency this is the 6th consecutive year of increases after keeping them steady during the "Financial Crisis".  Due to the strength of the USD versus the CAD the increased dividend still shows a decline compared to the comparable payout from 2015.  No worries though because that will provide a boost to actual yield whenever the currency winds shift.  The current yield on Toronto Dominion shares stands at 4.24% for U.S. investors.

I own 23 shares of Toronto Dominion in my FI Portfolio so this dividend increase grew my forward 12-month dividends by $3.68 in CAD but only $2.72 in USD.  This is the 2nd dividend increase I've received from Toronto Dominion since initiating a position in early 2015.  Cumulatively my income from Toronto Dominion has increased 17.0% in CAD!  According to USInflationCalculator the total inflation for that same time period sits at 0% so Toronto Dominion is crushing inflation and increasing my purchasing power.

My forward dividends increased by $2.72 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 3.18% this raise is like I invested an extra $85 in capital.  Except that I didn't!  One of the companies I own just decided to send more cash my way.  That's how you can eventually reach the crossover point where your dividends received exceed your expenses.  That's DIVIDEND GROWTH INVESTING AT WORK!  That's the beauty of the dividend growth investing strategy because you build up your dividends through fresh capital investment as well dividend increases from the companies you own.

I've now received 9 dividend increases thus far in 2016 adding $52.76 to my forward 12-month dividends.

February's dividend growth bonanza is just about over with just one more of my holdings possibly announcing an increase.  I say possibly because last year it was announced on the last Thursday of February, but that also coincided with their quarterly earnings announcement which won't be until March 1st.  .

My FI Portfolio's forward-12 month dividends are up to $5,550.72 and including my Loyal3 portfolio's forward dividends of $62.48 brings my total taxable account forward dividends to $5,613.20.

Do you own shares of Toronto Dominion Bank?  

Image courtesy of digitalart on FreeDigitalPhotos.net.

6 comments:

  1. Congrats on the raise, JC. Yup...I am a fellow shareholder in TD and love the 7.8% div increase announced. TD is better positioned than others and should do well over the years. Lower exposure to oil & gas investments, higher exposure in US (which was a brilliant move during the financial crisis) and increased exposure to the retail credit businesses via acquisitions a few years. I like where the business is strategically headed.

    Best wishes
    R2R

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    1. R2R,

      I really like TD because of their diversification and US exposure. Would love to add more to my holding right now because there's some really good value at these price levels. I'm looking forward to seeing what BNS will offer up on March 1. My guess would be a boost to $0.71 if they're really cautious about the future but most likely $0.72.

      Thanks for stopping by!

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  2. PIP,

    It's great to read positive posts about dividends bright and early in the morning. Great to see your increases and it looks like it will yield very well moving forward. I've been nervous about getting into banks as they've taken a hit as of late but they're so attractive at such a low buy in price. I'm sure i'll grab one this month unless something more attractive shows up but it's nice to see them paying off for you.

    -Dividend Monster

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    Replies
    1. Dividend Monster,

      I think the banks are looking attractive. They're getting crushed right now in the markets but their operations aren't really being effected. So it's just boosting up the yields. I like WFC out of the big US banks but TD and BNS are the two CDN banks I own and follow. Looking forward to seeing what you purchase.

      Thanks for stopping by!

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  3. That's why we own all the big 6 Canadian banks plus 1 smaller player (National Bank). :)

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    Replies
    1. Tawcan,

      I really like the CDN banks and even more so right now with USD strength.

      Thanks for stopping by!

      Delete