Dividend Increase | Bank of Nova Scotia $BNS #Dividend

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 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 May 25th the Board of Directors at Bank of Nova Scotia (BNS) approved an increase in the quarterly dividend payment.  The dividend was increased from $1.00 CAD to $1.03 CAD which is a solid 3.0% increase.  ScotiaBank's dividend growth streak is starting anew after regulators would not allow any raises in the midst of the COVID pandemic.  Dating back to 1994 Bank of Nova Scotia has given raises in all but 2 years during that 29 year span with 2010 being the other holdout.  Shares currently yield 4.95% based on the new annualized payout.

The new dividend will be payable July 27th to shareholders of record as of July 5th.

Since I own 30.899 shares of ScotiaBank in my FI Portfolio, this raise increased my forward 12-month dividends by $2.89.  This is the 11th dividend raise that I've received from Bank of Nova Scotia after initiating a position in March 2015 with the total organic growth coming in at 51.5%.


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

Bank of Nova Scotia has paid dividends every single year since 1833 which is truly incredible.  Since 1994 the only two years they haven't given out dividend increases were during a global pandemic and a global financial crisis; however, they didn't cut dividends during either of those periods either.

Since 1994 ScotiaBank has given year over year dividend growth ranging from 0.0% to 38.4% with an average of 11.3% and a median of 8.4%. 

Over that same time there's been 24 rolling 5-year periods with annualized dividend growth ranging from 4.5% to 21.4% with an average of 10.8% and a median of 7.6%.

There's also been 19 rolling 10-year periods since 1994 with annualized dividend growth spanning 5.5% to 17.4% with an average and median of 11.0%.

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



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

For dividend yield theory I consider the fair value range to be the forward dividend yield +/- 10% compared to the 3-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.

Bank of Nova Scotia's 3-year average forward dividend yield is 5.15% which corresponds to a share price of $62 based on the new annualized payout.  

I consider the fair value range based on dividend yield theory to be the 3-year moving average yield +/- 10%.  That gives a fair value range of $57 - $69 and suggests that shares are trading within the fair value range.
  
  




Wrap Up

This raise increased my forward dividends by $2.89 with zero effort on my part.  That's right, absolutely nothing to contribute to their operations.  Based on my FI Portfolio's current yield of 2.54% this raise is like I invested an extra $114 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.

This is the 27th dividend increase I've received from the companies in my FI Portfolio increasing my forward 12-month dividends by $234.53 combined.

My FI Portfolio's forward-12 month dividends are $10,203.55  Including my FolioFirst portfolio's forward dividends of $185.01 brings my total taxable accounts dividends to $10,388.56.  My Roth IRA's forward 12-month dividends are $1,025.43.  My Rollover IRA's forward dividends are $4,358.03.  Across all accounts I can expect to receive $15,772.02 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?  

Please share your thoughts below.

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