Dividend Increase | Toronto-Dominion Bank (TD)

Dividend | Dividend Growth | Financial Independence | Freedom | Passive Income
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks TD 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 28th the Board of Directors at Toronto-Dominion Bank (TD) approved an increase to their dividend payment.  The dividend payout was increased from $0.67 CAD to $0.74 CAD.  That's a huge 10.5% increase from the prior payout.  Toronto-Dominion Bank is a Dividend Challenger with 8 consecutive years of dividend increases.  Shares currently yield 3.90% based on the new annualized payout for U.S. owners.  

The new $0.74 CAD dividend will be payable on April 30th to shareholders of record as of April 10th.

Since I own 23 shares of Toronto-Dominion in my FI Portfolio this raise increased my forward 12-month dividends by $4.89.  This is the 4th dividend increase I've received from TD Bank since initiating a position in July 2015.  The total organic dividend growth since I initiated a position has been 45.1%.  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.

Toronto-Dominion's dividend record is one of the few companies that is on par with Bank of Nova Scotia.  TD Bank has paid dividends to owners since 1857 you know since before the U.S. Civil War even started.  

TD's dividend growth record isn't pristine; however, since at least 1970 there's never been a decrease, although there's been a few pauses in growth.  The most recent freeze was during the financial crisis of 2008/09 and considering they're a bank I'd be surprised if they didn't freeze the dividend.  TD Bank has raised the payout now in 45 of the last 49 years.

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 1970 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 $0.74 CAD dividend is maintained for the rest of 2019

Wrap Up

This raise increased my forward dividends by $4.89 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 $164 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 14 total increases from 14 of the 53 companies held in my FI Portfolio.  In total my forward 12-month dividends have increased by $83.23.

My FI Portfolio's forward-12 month dividends increased to $6,804.27.  Including my FolioFirst portfolio's forward dividends of $97.86 brings my total taxable accounts dividends to $6,902.13.  My Roth IRA's forward 12-month dividends remain at $414.23.

Do you own shares of Toronto-Dominion Bank?  What about other international companies?

Please share your thoughts below.