Monday, July 20, 2015

Dividend Growth Calculation 3

Last week I talked about comparing actual dividend growth calculations on Royal Bank (TSX-RY) and RioCan REIT (TSX-REI.UN) to what my spreadsheet predicted. In this blog entry my actual stock did better than my spreadsheet predicted for both stocks. The reason for this is probably both stocks had strong dividend growth early and weak dividend growth or none later on.

In this post, I relooked at my spreadsheet and did more calculations for these stocks. What I changed was to reverse the timing of the dividend increases so the good ones were at the end and the weak ones were near the beginning. So I used year 20 increases for year 1, year 19 increase for year 2, year 18 increase for year 3 and down to year 1 increase for year 20.

As you can see in the charts below after 5 years, when I reversed the order of the dividend increases, the new spreadsheets show the reversed order with the lowest dividend yield on original stock price and lowest percentage of the stock price coverage.

Stock Ori Yield Div Growth Div Yield % of stock
RY SS 4.13% 11.56% 7.14% 29.04%
RY Actual 4.13% 11.56% 7.85% 30.20%
Reversed 4.13% 11.56% 5.62% 24.53%
RIO SS 7.67% 2.92% 8.86% 41.85%
RIO Actual 7.67% 2.92% 10.09% 47.87%
Reversed 7.67% 2.92% 8.25% 40.35%


After 10 years the chart with the dividend order reversed is still giving the lowest dividend yield on original stock price and the lowest percentage of the stock price coverage.

Stock Ori Yield Div Growth Div Yield % of stock
RY SS 4.13% 11.56% 12.34% 79.21%
RY Actual 4.13% 11.56% 16.25% 92.18%
Reversed 4.13% 11.56% 9.53% 59.28%
RIO SS 7.67% 2.92% 10.23% 90.17%
RIO Actual 7.67% 2.92% 12.12% 105.08%
Reversed 7.67% 2.92% 8.58% 82.06%


After 15 years the chart with the dividend order reversed is still giving the lowest dividend yield on original stock price and the lowest percentage of the stock price coverage.

Stock Ori Yield Div Growth Div Yield % of stock
RY SS 4.13% 11.56% 21.32% 165.91%
RY Actual 4.13% 11.56% 27.55% 219.73%
Reversed 4.13% 11.56% 19.72% 134.28%
RIO SS 7.67% 2.92% 11.81% 145.97%
RIO Actual 7.67% 2.92% 12.60% 167.92%
Reversed 7.67% 2.92% 10.31% 129.37%


After 20 years the chart with the dividend order reversed has a dividend yield on original stock price close to the actual, but it still has the lowest percentage of the stock price coverage.

Stock Ori Yield Div Growth Div Yield % of stock
RY SS 4.13% 11.56% 36.85% 315.72%
RY Actual 4.13% 11.56% 37.47% 389.57%
Reversed 4.13% 11.56% 37.47% 284.59%
RIO SS 7.67% 2.92% 13.64% 210.41%
RIO Actual 7.67% 2.92% 13.61% 233.37%
Reversed 7.67% 2.92% 13.56% 187.09%


See the full spreadsheet here.

On my other blog I am today writing about TMX Group Ltd. (TSX-X, OTC-TMXXF) ... continue...

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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