Wednesday, January 20, 2010

State Of Dividends 4th Quarter 2009

Today, I am updating my spreadsheet on dividends. I am showing not only my stocks, but also all the ones I follow and have blogged about. For all these stock, I have shown in the “09” column if the company actually increased their dividend yet for the current year of 2009. I have also started columns for 2010 dividends. Next, I will talk about the dividends for specific companies.

In this last quarter, I have had only three stocks increase their dividends. They are BCE Inc (TSX-BCE), Canadian Real Estate Investment Trust (TSX-REF.UN) and Emera Inc (TSX- EMA). I have certainly not done as well this year in dividend increases as I did last year. This is to be expected as we are coming out of, maybe, a recession. The one good thing is that no company I held decreased their dividends in the last quarter of 2009.

With BCE Inc (TSX-BCE), after no dividend increases in 2008, they raised dividends twice this year. They increased the dividends in April 2009 and then in October 2009. This gives me some 5.5% more dividends for 2009 and also, my total dividends in 2010 over 2009 will be 5% higher because of these two dividend increases. When dividend increases come after the first dividend is paid, it will increase the dividends paid in the following year also.

For BCE, I got 4 dividends of $.365 in 2008 for a total dividend of $1.46 per share. In 2009, I got one dividend of $.365, two dividends of $.385 and one dividend of $.405 for total dividends of $1.54. If in 2010, I get 4 dividends of $.405, I will get total dividends of $1.62. The other good thing about BCE Inc is that the dividend yield is currently at 5.5%. The last thing to mention is that the dividend increases for this stock have been at 4% per year for the last 5 years. Since inflation is quite low, this is good. You want dividend increases above inflation, or your income will just keep falling behind.

With Emera Inc (TSX-EMA), the recent dividend increases have not been great as this stock has a 5 year growth in dividends of just 2.3% per year. Currently this also is above inflation. The dividend increases this year is a healthy 6.7%. For this stock, as the dividend change is late in the year, I will earn some 5.8% move in dividends in 2010 if the rate remains the same. The current yield for this stock is 4%.

The last stock to talk about is Canadian Real Estate Income Trust (TSX-REF.UN). Unit trust companies are not known for big dividend increases, but for good yields. This is a trade off when you live off of dividend income. Having some unit trust companies will raise your income per year, but the dividend income will not rise much. Mostly, you can expect distribution rises to keep pace with inflation. Since this is a REIT (Real Estate Income Trust), it is not affected by the new tax laws coming into effect in 2011.

The dividend increase for Cdn Real Estate Trust for this year is just 1% and this is low. Because the increase is late in the year, my dividends will also be higher in 2010 by 1.4%. This is not much again. This income trust has raised its dividend by just under 2% per year over the last 5 years. This is probably barely keeping in line with inflation. We are lucky that inflation has been low recently. The yield on this stock at 4.8% is not a bad yield. Although this dividend yield is not particularly high given that BCE’s dividend yield is currently 5.5%.

If you are looking for stocks to buy this winter, you might want to first look at the ones with dividend increases.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

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