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 Bank of Nova Scotia for another 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 August 27th the Board of Directors at Bank of Nova Scotia (BNS) approved an increase to the quarterly dividend payment.  The dividend was increased from CAD $0.87 up to CAD $0.90 per share.  That's a solid 3.5% increase.  Bank of Nova Scotia is a Dividend Challenger with 9 consecutive years of dividend increases.  Shares currently yield 5.26% based on the new annualized payout.

The newly increased dividend will be payable on October 29th to shareholders of recorded as of October 1st.

This raise might seem a bit small to really get excited about; however, you have to remember that Bank of Nova Scotia already announced an increase back in February.  Compared to the same payout last year the new dividend represents a 5.9% raise.

Since I own 27.386 shares of ScotiaBank in my FI Portfolio, this raise increased my forward 12-month dividends by $2.48.  This is the 9th dividend increase I've received from ScotiaBank since initiating a position in March 2015.  

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

Bank of Nova Scotia's is one of the most impressive around.  They've been paying a dividend since...drumroll...1832.  Say what?!?!?!  

Bank of Nova Scotia's streak of annual raises ended during the financial crisis.  Considering that "the world was ending" I think I can let that pass.  Starting in 2011 Bank of Nova Scotia has resumed growing the dividend payment regularly giving owners raises every 6 months.

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.

For some businesses it's best to examine dividend growth over longer periods due to the fluctuations in their profitability being largely out of their control.  Of the 21 rolling 5-year periods since 1994, Bank of Nova Scotia's annualized dividend growth has ranged from 4.5% to 21.4% with a median growth rate of 11.3%.  Of the 16 rolling 10-year periods dividend growth has ranged from 5.5% to 17.4% with a median growth of 12.7%.

Based on dividend yield theory, Bank of Nova Scotia's current yield of 5.26% is well above the 5-year moving average of 4.20%.  Dividend yield theory suggests that shares of ScotiaBank should trade at $64 or roughly 25% higher.  Given the undervaluation implied by dividend yield theory Bank of Nova Scotia looks like a good candidate for further research.

For dividend yield theory I consider the fair value range to be the forward dividend yield +/- 10% compared to the 5 year moving average, the under/over value area to be to between 10%-20% deviation from the average and significant over/under value are greater than a 20% deviation from the average.

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

*The above dividend yield theory chart shows the historic dividend yield based on the current CAD:USD exchange rate.  If someone knows of a source for the historic CAD:USD exchange rates I'd be more than happy to include them in the spreadsheet to give a better reflection of the valuation for U.S. investors that own or are looking to purchase shares of BNS that are listed on the US markets.

Wrap Up

This raise increased my forward dividends by $2.48 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 3.00% this raise is like I invested an extra $82 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 33 increases from 29 of the companies in my FI Portfolio.  Combined those raises have boosted my forward 12-month dividends by $229.24.

My FI Portfolio's forward-12 month dividends climbed to $7,402.72.  Including my FolioFirst portfolio's forward dividends of $99.89 brings my total taxable accounts dividends to $7,502.61.  My Roth IRA's forward 12-month dividends remain at $613.10.  My Rollover IRA's forward dividends increased to $2,139.85.  Across all accounts I can expect to receive $10,255.56 in dividends over the next year.

I've also started compiling dividend data on many of the companies that I own or would like to own.  Bank of Nova Scotia's can be found here which includes the dividend history (as far back as I can find without spending hours hunting it down), rolling dividend growth rates and dividend yield theory.  To see other companies that I've already gathered the data on you can check out the Dividend Companies page.  Check it out and let me know what you think.

Do you own shares of Bank of Nova Scotia?  What about the other Canadian banks?

Please share your thoughts below.


  1. PiP -

    Love the Canadian Banks and their semi-annual dividend increases! #BNS!!


  2. I'll take that raise any time. Love the Canadian banks a lot even though financials are looking OK at best these days. I'm sticking with my TD, BNS and RY!

    1. DivHut,

      Financials are definitely looking a bit shaky right now, but that's just fine by me since I'm playing the long game here. Love those Canadian banks and I just might add a 3rd one to the portfolio in the future.

  3. I have not invested in Canadian stocks, because I don't want another currency in my portfolio. For now USD and EUR are enough. I wish you well with this stock!

    1. ADD,

      That's a very good reason since I'm sure it just complicates things. Pretty much all of my dividends are USD except for a little bit of CAD.


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