One Raise At A Time | Those Friendly Canadians!

Concept of how dividend growth investing works, health care, real estate
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Bank of Nova Scotia for the dividend increase!
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?  Dividend growth investing is far from a get rich quick investment strategy, rather you need to remain focused on the long term goal to be successful.

On Tuesday the Board of Directors at Bank of Nova Scotia (BNS) approved an increase to their dividend payment.  The quarterly dividend was increased from $0.82 CAD up to $0.85 CAD per share.  That's a 3.7% increase!  Bank of Nova Scotia has now increased dividends for 8 consecutive years giving them the title of Dividend Challenger.  Shares currently yield 4.42% based on the new annualized payout.

The new dividend will be paid out on October 29, 2018 to shareholders of record as of October 2nd.  

While this raise might not seem all that great at just 3.7% one has to look at Bank of Nova Scotia's m.o. before passing judgement.  Management prefers to give 2 smaller increases during the year rather than 1 larger increase.  Compared to the same payment in 2017 the dividend has increased 7.6% which is just fine by me.

Since I own 26.087 shares of Bank of Nova Scotia in my FI Portfolio this raise increased my forward 12-month dividends by $2.42.  This is the 7th dividend increase I've received from Bank of Nova Scotia since initiating a position in March 2015.  Over that time the dividend has grown by 25.0% organically.  According to US Inflation Calculator, the cumulative rate of inflation is just 6.3%.  

A full screen version of this chart can be found here.

Bank of Nova Scotia's dividend history is quite impressive.  They've paid a dividend to shareholders every year since 1832 and they've given owners a pay raise more often than not.  It should come as no surprise that the bank fell on hard times during the global financial crisis in 2008/9 and as such the dividend growth was halted.  Since 2011 the dividend increases have come back like clockwork.  Looking forward I expect annual dividend growth to be between 5-8% more often than not.

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 1994 can be found in the following chart.  



A full screen version of this chart can be found here.

Wrap Up

This raise increased my forward dividends by $2.42 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.90% this raise is like I invested an extra $108 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!  The beauty of the dividend growth investing strategy is that you build up your dividends through fresh capital investment as well dividend increases from the companies you own.

Thus far in 2018 I've received 43 dividend increases from 39 of the companies in my FI Portfolio combining to increase my forward 12-month dividends by $390.35.  

My FI Portfolio's forward-12 month dividends increased to $6,453.71.  Including my FolioFirst portfolio's forward dividends of $91.08 brings my total taxable accounts dividends to $6,44.79.  My Roth IRA's forward 12-month dividends are at $371.75.

Do you own BP plc in your portfolio?  What about other commodity specific companies?

Please share your thoughts below.

Comments

  1. You got to love those increases PIP. That's money you earned simply for owning the stock. The 3.7% may be small, but it all adds up over time and definitely brings you closer to that crossover time! Congrats.

    ReplyDelete
  2. I keep loving those Canadian banks. I'm happy I added three to my ROTH a while back. They seem to be rocking along and continue to provide a nice growing passive income stream. Still long BNS, TD and RY.

    ReplyDelete

  3. I really thank you for sharing the blogs on the financial sector with us. I want to request to keep blogging and sharing because it is really helpful. Get more information about Nifty trading and online Free Nifty Tips by experts on my blogs here.
    Capitalstar

    ReplyDelete

Post a Comment