Tuesday, September 11, 2012

BMO and Scotia Bank Dividend Increase

BMO finally increased its dividend and BNS added a second dividend increase already this year. As I shared this news with the rest of my co-workers, they failed to see the significance of my celebrating and left the break room to go back to work. Sometimes I wonder whether they have actually been paying attention to my lunch time investing seminars. Oh well, more dividends for me and the other smart investors out there.

It’s about time, BMO

After five long years, the super cautious board of directors at BMO decided it was time to increase the dividend by 3%. The quarterly dividend is up $0.02 cents a share to $0.72 with a yearly dividend payment of $2.88 going forward. BMO had a quarterly profit of $907 million which was up 37% from a year ago. This increase means that all of the big 5 banks are now dividend growers once again and BMO finally caught up after stopping to tie its shoe lace. Let’s take a look at BMO’s dividend history since 2000:

That’s quite the plateau between 2008 and 2012 but at least the dividend growth is activated once more. These slumps are a part of dividend stock investing and the key thing to remember is that the dividend was maintained. BMO was just playing it safe while they were busy trying to expand in the United States. In fact, my BMO dividends were just deposited into my account today and still have that fresh dividend smell that I’ll never get tired of. I just wish there were more dividends so I wouldn’t have to slave away each day. All in good time I guess!

Another one already, BNS?

It seems like I just finished updating my spreadsheet with Scotiabank’s last dividend increase in March and now I have to do it all over again. Normally extra work makes me cranky but I don’t mind my passive dividend income increasing one bit! Scotiabank’s quarterly profit rose 57% to 2.05 billion dollars which is up from 1.3 billion a year ago. (Gee, I sure wish I could loan out other people’s money and charge interest for it!)

BNS boosted its dividend by 3.6% increasing its quarterly dividend by $0.02 cents to $0.57 cents and yearly dividend of $2.28 per share. This second dividend increase makes a total of 9.6% from Scotiabank so far this year and I couldn’t be happier. I just added BNS to my TFSA self-directed investing account this year and so far it’s been a smart move. Let’s take a look at Scotiabank’s dividend history since 2000:

There’s a slight lag in the dividend growth thanks to the housing market debacle in the U.S., but since then BNS has slowly made it back on track and those lovely dividends keep on increasing. It will be interesting to see if BNS can pop out a third dividend increase later in the year, but I don’t want to push my luck. I’m more than happy with a solid 9.6% dividend increase that will help combat the ever increasing cost of living that’s been kicking my butt as of late.

What’s this? More you say?!

Just when you thought it couldn’t get any better, analysts are hopeful of more dividend increases later this week when the rest of the Canadian banks report their quarterly earnings on Thursday. I could be one happy investor as I own shares in Royal Bank and TD as well. Let’s see which Canadian bank comes out with the largest dividend increase for the 2012 year. My money is on TD so stay tuned to find out!
Which Canadian bank do you think will have the largest dividend increase this year?

This article was written by The Loonie Bin. If you enjoyed this article, please consider subscribing to his feed.


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