Tuesday, July 13, 2010

State of My Dividends, Q2 2010

Today, I am updating my spreadsheet on dividends. For all my stocks, I have shown in the “10” (for 2010) column, if a company has actually increased their dividend yet for the current year of 2010. In the “div” column preceding, I show the percentage increase in the dividends for the company’s financial year ending in 2010.

For the second quarter of this year, I have had 7 companies increase their dividends (these dividends are in blue to distinguish them from increases that occurred in the first quarter). Since I do dividend calculations based on the applicable company’s financial year, I have also started columns for 2011. There are other increases shown in the columns for 2010 and some for 2011 and this is because when a company increases its dividend part way through their financial year, the total dividends for the following financial year will also be affect.

For example, take Emera Inc (TSX-EMA). I received the dividend in February 2010 at the old dividend rate in effect at the end of 2009 that is $.2725 per share. The dividend I received in May 2010 was at the increased rate of $.2825 per share. So, for 2010 I will receive one dividend at $.2725 per share and 3 at $.2825 per share. So, total dividend for 2009 is $1.03 ($.2525 x3, $.2725 x 1). For 2010, total dividend will be $1.12 ($.2725 x1, $.2825x3) for an increase of 8.7%. I can potentially receive in 2011 4 dividends of $.2825 or $1.13, an increase of .9% over 2010. So, for 2010 I put a Y in “10” column to show that there was a dividend increase in 2010 and for 2011, I put an “N” in “11” column to show no actual increase, so far, in dividends for 2011. (See more on Emera below.)

The first stock to talk about is BCE Inc (TSX-BCE). This company has a fairly good recent record of increasing it dividends, but they do not increase them every year. The 5 and 10 year growth in dividends is 5.7% and 1.5% per year, respectively. BCE lowered their dividend when they sold off Nortel in 2000. They also only paid out 2 dividends in 2008, when they thought they were going to go private. This, of course, did not occur and they restated the dividends, so dividends really did not change in 2008. In both 2009 and this year, dividends are increased by just over 8%. This is a good increase. I must admit that I have made a lot in dividends over the years from this stock. See the spreadsheet.

And, now back to Emera Inc (TSX-EMA). The dividends for this stock are quite high, usually running around 4.5% and higher. The best you can say is that dividend increases have kept pace with inflation. The increases for 2008, 2009 and 2010 have been above 6.7% and this is nice. The 5 and 10 year growth in dividends is 3.2% and 1.7% per year, respectively. This is considered to be a solid dividend paying stock and it is a utility stock. See the spreadsheet.

Melcor Developments Inc (TSX-MRD) is a real estate company and is considered a higher risk that the last two companies. They pay out dividends twice a year, as they can afford to. They also have paid out special dividends quite often over the years. If you look at just the regular dividends, the increase in dividends over the past 5 and 10 years have been at the rate of just over 15% per year. But as I have said, the regular dividends have fluctuated and dividends for 2006 to 2010 have been, per share, $.30, $.40, $.42, $.25, and $.30. So changes in dividends from 2007 to 2010 are 33% increase, 5% increase, 50% decrease and then a 20% increase. You can make good income from this stock, but you have to be able to tolerate fluctuating dividends. The problem also, is that dividends would tend to decrease in recessions, and that may not fit into your spending plans. See the spreadsheet.

Tomorrow, I will continue talking about my stocks with dividend increases in this first quarter of this year.

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 for stocks followed and investment notes. Follow me on twitter.

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