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.