On June 1st, National Bank of Canada (NA) raised their quarterly dividend 1.85% from $0.54 to $0.55. The dividend yield is now 4.91%, while I picked up my shares with a giant yield of 6.14% a couple of months ago. I’ve also made a 30% capital return on my investment. I’m now kicking myself for playing it so safe with a small up-front investment. It’s been one of my Top 3 performers. Not bad for the sixth largest Canadian bank.
The Dividend Beginner Portfolio
Considering the Dividend Beginner portfolio consists of 30 shares of NA, my annual income from NA has increased by $1.20 from $64.80 to $66.00 ($5.40 to $5.50 per month). My 12-month forward dividend income has risen from $2,087.66 to $2,088.86, an increase of 0.06%. My average monthly dividend income is now $173.97.
National Bank of Canada accounts for 3.14% of the Dividend Beginner’s portfolio. Considering I made such a small investment in it, although the yield was gigantic (especially for a bank), it only accounts for 3.14% of my total dividend income.
While a $1.20 increase in annual dividend income is laughable, think about how it would require an investment of $30.00, yielding 4.00% to generate $1.20 in dividend income. That’s the equivalent of getting one to three hours of your life back, depending on your wage.
|Annual Dividend Income||$2,087.66||$1.20||$2,088.86|
|Monthly Dividend Income||$173.97||$0.10||$174.07|
National Bank Earnings Fall 48%
While National Bank of Canada announced their near 2% dividend increase, they were also reporting Q2 2016 earnings – and boy, they weren’t great. The thing is, however, that the big hit was only due to “result of a sectoral provision for credit losses recorded for producers and service companies in the oil and gas sector”. Their sectoral provision amounted to $183 million.
NA reported net income of $210 million for Q2 2016, while they reported $404 million in Q2 2015 – which marks the humongous 48% drop in earnings.
Things aren’t so bleak however, if we take into account that with adjusted earnings (not including the provisions for credit losses and specified items), earnings would have been $420 million, which is actually a 2% increase over last year.
Here’s a link to NA’s Q2 2016 earnings report, if you’re interested in reading more details.