Dividend Increase | Bank of Nova Scotia (BNS)

Dividend | Dividend Growth | Financial Independence | Freedom | Passive Income
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks ScotiaBank for the dividend increase!
There's an old Chinese proverb that says "the best time to plant a tree was 20 years ago, the next best time is now".  The reason for this is that it takes time for a tree to grow and prosper and for you to start reaping its benefits.  Dividend growth investing is much the same way.  It takes consistent saving and investing as well as time and patience to let the power of dividend growth take hold.

That's why one of my favorite things is when one of the companies I own decides to pay out more in dividends.  You mean I get a pay raise just for owning a small piece of a company?  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.  

On February 26th the Board of Directors at Bank of Nova Scotia (BNS) approved an increase to their dividend payment.  The dividend payout was increased from $0.85 CAD to $0.87 CAD.  That's a 2.4% increase from the prior payout.  Bank of Nova Scotia is a Dividend Challenger with 8 consecutive years of dividend increases.  Shares currently yield 4.76% based on the new annualized payout for U.S. owners.  

The new $0.87 CAD dividend will be payable on April 26th to shareholders of record as of April 2nd.

This increase might seem a bit light at just 2.4%; however, it's important to look the bigger picture.  Bank of Nova Scotia has been giving investors a smaller pay raise every 2 quarters rather than 1 larger one.  So the better comparison is to the April 2018 payout which was a $0.82 CAD payout.  The increase on the comparable period is a much more impressive 6.1%.

Since I own 26.616 shares of ScotiaBank in my FI Portfolio this raise increased my forward 12-month dividends by $1.61.  This is the 8th dividend increase I've received from Bank of Nova Scotia since initiating a position in March 2015.  The total organic dividend growth since I initiated a position has been 27.9%.  According to US Inflation Calculator the cumulative rate of inflation over that same time is 6.2%.  

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

Bank of Nova Scotia's dividend record is truly impressive and one that you'd be hard pressed to find peers that rival it.  ScotiaBank has paid a dividend to shareholders every year since 1832 and has rewarded owners with dividend increases in 44 of the last 46 years.  

ScotiaBank's yearly streak was snapped during the financial crisis; however, dividend growth was just paused and the dividend was not cut compared to many financial companies during that time.  

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.

*2019's growth rate assumes the new $0.87 CAD dividend is maintained for the rest of 2019

Wrap Up

This raise increased my forward dividends by $1.61 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.98% this raise is like I invested an extra $54 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 2019 I've received 13 total increases from 13 of the 53 companies held in my FI Portfolio.  In total my forward 12-month dividends have increased by $78.34.

My FI Portfolio's forward-12 month dividends increased to $6,799.39.  Including my FolioFirst portfolio's forward dividends of $97.85 brings my total taxable accounts dividends to $6,897.24.  My Roth IRA's forward 12-month dividends remain at $414.23.

Do you own shares of ScotiaBank?  What about other international companies?

Please share your thoughts below.