Dividend Increase : Bank of Nova Scotia

This week all the 5 major banks report earnings. Today Bank of Nova Scotia earnings cam in at 1.77 billion profit. This net  income is lower than the same period of last year, but there was a large profit in 2012 from the sale in Toronto of the their headquarters. If you take away this gain from the sale of their headquarters, the profit in the same quarter last year is approximately 1.44 billion.

The Bank of Nova Scotia (BNS) has announced a quarterly dividend increase  of 0.02 a share. This equates to a raise of  3.33 percent and is their second dividend increase this year. The total dividend increase in 2013 is 8.77%.  It is difficult to get raises like that year over year from an employer.

I currently own less than 9 shares, buy these shares are enrolled in a DRIP program directly through the transfer agents. The allows my shares to compound at a greater rate. So over time, dividend income will grow at  quicker pace


It will be small now, but will grow faster and faster as the years go by.

DISCLOSURE:  Long BNS


DISCLAIMER:

     I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.  Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk

Share Buy Backs

Killam Properties Inc. is a corporation (NOT A REIT ) , listed on the Toronto Stock Exchange, that deals with rental real estate.  Killam Properties Inc  made their  first purchase in 2002.   Killam Properties has properties that are located in Atlantic Canada and Ontario. Killam Properties Inc. also own  44 manufactured home communities, or land lease communities that are located in Atlantic Canada in Ontario. Killam Properties Inc. can keep more of the profits to grow the company as they are not obligated to pay out 90% of their profits to investors like a REIT.  Killam Properties pays a dividend as it is a corporation whereas a REIT pays a distribution.

Killam Properties Inc. recently been approved to buy back 2500000 shares over a 52 week period.   The shares will be retired when Killam purchases them on the open market. 

Why would a company buy back its own shares? A company will buy back its own shares when they feel the share price of their stock doesn't accurately represent the current value of their company. Buybacks can be a good use of company funds at the right price and beneficial to remaining investors as these investors get to own a bigger percentage of the company.

As of this post, I currently own 395 shares of Killam Properties Inc. I get to own a bigger percentage of this company at no cost to me. As the amount of shares outstanding decreases, the share price will likely increase due to supply and demand issues.

When shares are retired  as a result of buy backs the EPS automatically goes up and vice versa when the company issues more shares.   This could fool investors. So investors need to do their due diligence  in which they can discover an increase of decrease in the amount of shares outstanding, and in turn earnings year to year.


Disclosure  : Long KMP.TO (Killam Properties)

DISCLAIMER:

     I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.  Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk

REITs - Part 2

This is a continuation from my previous post on REITs.

Some Advantages:

• A small funded investor can get expose to the real estate market
• The yields are high as the distrutions are high as REITs must payout 90% or more of their profits to shareholder.
• Don't have to deal with tenants directly and all the problems that comes with it.
• Managed by experts.
• Some tax advantages depending on the break up of the distribution payments.

Some Disadvantages

• you don't get all the tax breaks if you own rental real estate directly.
• you don't have control over the investment

As you travel around a city and see large commercial buildings, they are, more than likely, owned by a REIT. The tenants of the buildings or section of a buildings sign long term leases with the REIT.  The earnings from rent and sales of income producing real estate are passed on to the investors as REITs are required to payout 90% or more of their profits to investors. By doing this they are not required to pay corporate tax.

My first REIT I purchased was Whiterock REIT. My yield on cost was 9.1%. The entire distribution was 100% return of capital so there was no tax on the distributions.  The REIT was acquired by Dundee REIT. I decided to redeem my shares at this point. The return of capital that I received was subtracted from my adjusted cost base, there by lowering my ACB. This mean my capital gain was higher as I sold the units had a higher price than what I paid for them.  I transferred the proceeds of this sale to my tax free account and initiated a position in Dundee REIT.

Note: Not all REITs have distributions that are 100% Return of capital. So you will have to pay taxes on things like interest. In Canada, the distributions ARE NOT eligible for the dividend tax credit as the REIT doesn't pay corporate tax.

                                                            Telus Tower (Calgary Alberta)
                                                               owned by Dundee REIT

Being an unit holder of Dundee REIT I own a very small piece of this building and many others.

Disclosure : long  Dundee REIT

DISCLAIMER:

     I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.  Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk

REITS - Real Estate Investment Trusts - Part 1

This is a continuation from my previous post on REITs.

Some Advantages:

• A small funded investor can get expose to the real estate market
• The yields are high as the distrutions are high as REITs must payout 90% or more of their profits to shareholder.
• Don't have to deal with tenants directly and all the problems that comes with it.
• Managed by experts.
• Some tax advantages depending on the break up of the distribution payments.

Some Disadvantages

• you don't get all the tax breaks if you own rental real estate directly.
• you don't have control over the investment

As you travel around a city and see large commercial buildings, they are, more than likely, owned by a REIT. The tenants of the buildings or section of a buildings sign long term leases with the REIT.  The earnings from rent and sales of income producing real estate are passed on to the investors as REITs are required to payout 90% or more of their profits to investors. By doing this they are not required to pay corporate tax.

My first REIT I purchased was Whiterock REIT. My yield on cost was 9.1%. The entire distribution was 100% return of capital so there was no tax on the distributions.  The REIT was acquired by Dundee REIT. I decided to redeem my shares at this point. The return of capital that I received was subtracted from my adjusted cost base, there by lowering my ACB. This mean my capital gain was higher as I sold the units had a higher price than what I paid for them.  I transferred the proceeds of this sale to my tax free account and initiated a position in Dundee REIT.

Note: Not all REITs have distributions that are 100% Return of capital. So you will have to pay taxes on things like interest. In Canada, the distributions ARE NOT eligible for the dividend tax credit as the REIT doesn't pay corporate tax.

                                                            Telus Tower (Calgary Alberta)
                                                               owned by Dundee REIT

Being an unit holder of Dundee REIT I own a very small piece of this building and many others.

Disclosure : long  Dundee REIT

DISCLAIMER:

     I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.  Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk

Importance of dividends

Say you owned 100 shares of Jan 2, 2008 of Bank of Nova Scotia.


On Jan 2, 2008 BNS closed at $49.63

On Dec 31, 2012 BNS closed at $57.46

Gain = 100(57.46-49.63)=$783.


But, during that time there has been dividends paid of $1008.

With dividends, gain =783+1008=1791


Subject to approval by the Board of Directors, the payment date for common and all preferred shares is usually the third last business day of each fiscal quarter. The closing price on the dividend payment date as the drip price.

Jan 2008  100*0.48=$48.00 dividend payment   fill @$50.82 equals 0.945 shares
    ** total 100.945 shares

April 2008  100.945 shares *0.48=48.45  fill @ 54.00 equals 0.897
    **  total 101.842 shares

July 2008  101.842 shares * 0.48=48.88  filled @ 49.50 equals 0.987 shares
  ** total 102.829 shares

Oct 2008  102.829*shares * 0.48=49.36  filled @ 52.53  equals 0.940shares
  ** total 103.769 shares

Jan 2009  103.769*0.49=$50.85 dividend payment   fill @$31.7 equals 1.604 shares
    ** total 105.373 shares

April 2009  105.373 shares *0.49=51.63 fill @ 34.28 equals 1.506
    **  total 106.879 shares

July 2009  106.879 shares * 0.49 =52.37 filled @ 45.01 equals 1.164 shares
  ** total 108.043 shares

Oct 2009 108.043 shares * 0.49=52.94 filled @ 45.04 equals 1.175 shares
  ** total 109.218 shares

Jan 2010  109.218*0.49=$53.52 dividend payment   fill @ 50.82 equals 1.053 shares
    ** total 110.271 shares

April 2010  110.271 shares *0.49=54.03 fill @ 54.00equals 1.001
    **  total 111.272 shares

July 2010   111.272 shares * 0.49 =54.52 filled @ 49.50 equals 1.101 shares
  ** total 112.373 shares

Oct 2010 112.373 shares * 0.49=55.06 filled @ 52.53 equals 1.048 shares
  ** total 113.421 shares

Jan 2011  113.421*0.5125=$58.13 dividend payment   fill @ 57.05 equals 1.019 shares
    ** total 114.440 shares


April 2011  114.440 shares *0.5125=58.65 fill @ 60.16 equals 0.975 shares
    **  total 115.415 shares

July 2011  115.415 shares * 0.5125 =59.15 filled @ 57.79 equals 1.024 shares
  ** total 116.439 shares

Oct 2011 116.439 shares * 0.5125=59.67 filled @ 53.63 equals 1.113 shares
  ** total 117.552 shares

Jan 2012 117.552*0.5475=64.36 dividend payment   fill @ 52.34 equals 1.230 shares
    ** total 118.782 shares


April 2012  118.782 shares *0.5475=65.03 @54.88 equals 1.185 shares
    **  total 119.967shares

July 2012 119.967 shares * 0.5475=65.68 filled @ 51.77equals 1.269 shares
  ** total 121.236 shares

Oct 2012 121.236 shares * 0.5475=66.38 filled @ 54.04 equals 1.228 shares
  ** total 122.464 shares

Total gain = 122.464*57.46 - 100*49.63= 2073.78   

Dividends increase your gain and when the dividends are reinvested the gain is even higher. Also note that there is a 2% discount on shares reinvested with dividends through the transfer agent and most brokerages. So the gain with the DRIP will be even higher about if I applied to 2% discount .

DISCLAIMER:

     I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.  Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk

Dividend Income for July 2013

July 2013 has come and gone. During the month, passive income through dividends having been paid to me.
The total for this month is  $227.47.

Not included in this amount is a distribution payment from Dundee REIT in my margin account. This is a trade and all income will stay in this account to help grow the cash in this account to be used for investing or transferred to the TFSA for the same purpose. Currently, I take 30% of all my income from job, investing and interest from savings and pay myself first. If money is left over at the end of the month, then I put this amount into my investing account.

I will update my dividend tab with the above  total.

DISCLAIMER:

     I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.  Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk