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