At the financial forum, I talked to few people. They were all shocked when I said that my dividend income had increased in 2008. I looked at my statements for dividends in 2007, compared it to 2008, and found that my dividend income was up 13%.
Today, I am putting up a spreadsheet (see www.spbrunner.com/stocks/dividendincome.htm) showing two things about my dividend income for 2008. The first column called “Div” and the second is called “08”. Under “Div”, I have recorded the dividend increase for that particular stock for 2008 compared to 2007. The second column of “08”, I have recorded if the company actually declared a dividend increase for 2008.
This probably needs some explanation. First, take the Royal Bank (TSX-RY). My dividend from them was 9.9% higher in 2008 then in 2007. However, the Royal Bank did not declare a dividend increase in 2008. They did declare two dividend increases in 2007, one for May 2007 and one for November 2007. So the dividends I received in 2008 were those declared as of November 2008. So while I got more money in dividends from them, they did not actually declare a dividend increase. In 2007, I got dividends from them in February, May, August and November per share of $.40, $.46, $.46, and $.50 for a total of $1.82 per share. In 2008, I again got 4 dividends but of $.50 per share for a total of $2.00 per share. Going from $1.82 per share to $2.00 per share for year gives me an increase in dividends of 9.9%.
The next thing I want to talk about is special dividends. Companies are very reluctant to declare dividend increases unless they feel that they can be permanent. Nothing will destroy share value like a dividend decrease. Take the stock Leon's Furniture (TSX-LNF). They declared a one time special dividend of $.10 a share for May of 2008. According to my figures, the amount of dividends I got from Leon’s increase by over 32% in 2008. In my spreadsheet, I show in the “08” column “SP” for special dividends.
I have two stocks that have dividends paid in foreign currency. Sometimes, the currency exchange rate has more effect on my dividends than what is actually declared by the company. For these two stocks, I put a “U” (for unknown) in the “08” column. Also, for recent purchases, where I do not know if there was a dividend increased declared, I also put “U” (for unknown) in the “08” column.
For stock which I do not receive dividends, I just put “n/a” in the “Div” column. For stock which I purchased in 2007 and early in 2008, where I know if a dividend increase was declared or not, but I do not have enough data to determine the increase, I put “n/a” in the “Div” column and “Y”, or “N” as applicable in the “08” column. Also, I should make a special note on Bombardier (TSX-BBD.B). This stock cut their dividends in 2003 and completely stopped them in 2005. When dividends were resumed 2008, they were higher than those paid in 2005, but not as high as those paid in 2003 were.
My experience is that during bear markets, the rate of dividend increases slow down, but they do not cease all together. It will be interesting to see what the banks do for 2009. Both the Royal Bank and the Bank of Montreal have long histories of giving out more dividends each year. If they do no dividend increases in 2009, then there will be no increases in dividends for both these stocks.
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 on my web site.
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