McDonald's Increases Its Dividend

McDonald's Corp (NYSE: MCD) has just declared an increase to its quarterly dividend, from $0.55 to $0.61 (an 11% increase), starting on December 15.

Well, it seems people keep gobbling up McFood and drinking McCoffee even during tough times. I know that I do, although I try to keep it to the occasional visit. I want to fatten my wallet, after all, not my waistline!

I hold shares of MCD in my RRSP account. Based on my cost of purchase, this new dividend brings my yield to a juicy 4.4% (as opposed to a 3.3% yield based on current price).

Spending Money on the House

Last week, I went ahead with our plan to replace another set of windows on the house. When we started replacing the windows 2 years ago, we decided to go with a gradual approach based on the amount of cash we could afford to pay each year for those renovations instead of using the line of credit or another form of financing to replace them all at once.

So before winter we will have new windows for the 3 upstair bedrooms. This will be good for 2 reasons. First, as a quality of life issue for Princess, as the old windows were very hard for her to open and close (they were heavy and would often stick). Second, the new windows will be provide much better insulation, so this should save us some money on heating.

Still, this is a fairly big expense at slightly over $3 000, so in order to have the cash available to pay for the windows I will cut back on my monthly DRiP purchases. This means I won't reach my stated goal of dividend income for the year, but I can live with that.

Net Worth Update

As of September 1st, my net worth was $128 775 (up 1.9% from $126 412). If I exclude house-related assets and liabilities, my net worth was $87 442 (up 2.5% from $85 336). Another good month, considering that we were on vacation. Of course, we didn't spend a lot for vacation (we seldom do) and the stock markets were generally good to me.

Assets ($189 874, up 1.2% from $187 623)

• Bank Accounts $4 509 (up 1% from $4 466)
• Emergency Funds $2 368 (up 4.5% from $2 265)
• RRSP Accounts $56 426 (up 1.9% from $55 371)
• Non-Retirement Investments $27 878 (up 3.8% from $26 865)
• Home $98 430 (stable)

Liabilities ($61 099, down 0.2% from $61 211)

• Credit Cards $3 934 (up 2.9% from $3 822)
• Mortgage $57 097 (down 0.4% from $57 353)
• Line of Credit $0 (stable)

Ratios

• Debt / assets: 0.321 (down from 0.326)
• House value / total assets: 0.518 (down from 0.525)

Next may see some rise on the credit cards, as well as some additional expenses for the house. We have been late in ordering the second batch of replacement windows, and I need to get to it if we want them to be installed before winter (about $3K). My car is also being repaired right now, because the air conditioner failed and the driver's window electric motor is dying (about $700).

On the other hand, I'll soon be maxed out on the mandatory contributions to the employment insurance and Quebec Pension Plan, so my net pay will increase for the rest of the year.

Scotiabank: Higher Earnings, No Dividend Increase

Third quarter earnings are out for Scotiabank.

Well, there you have it. I was hoping to get a dividend increase from Scotia, but alas I'll have wait some more. Dividend

Earnings rose to $0.98 per share, with net income over the $1B mark for the third quarter. So this is another good quarter for the bank.

I'll remind myself that one of the reasons that had me select this bank for my first-ever DRiP company was because management is prudent and disciplined. The obviously thought they'd wait until the details on the new international financial rules are known -- and what their impacts will be -- before raising the dividend.

Scotiabank, When Will You Give Me a Raise?

Bank of Nova Scotia (TSX: BNS) is the first company that I acquired in my DRiP portfolio, 4 years ago. I see it as a strong company that's quite good at making money (it is a Canadian bank, after all). It has held up well through the financial CDO melt-down in 2008 and through the following recession. A great company.

However, the last time the quarterly dividend was raised was for the payment of July 2008, when it went up from $0.47 to $0.49 per share. So for 6 straight quarters, the dividend has remained the same. This was understandable, since earnings were somewhat impacted by the financial melt-down and then recession. At the height of the troubles, the dividend payout ratio rose as high as 70% of earnings. This ratio was at 50% before things started going sour, and is now at 54% based on earnings from the last 4 quarters.

Another thing to consider is the status of Scotiabank as a dividend achiever -- a company that has raised its dividend every year for at least 5 years. This is important because many indexes (and index funds) use such criteria when deciding which companies to invest in. According to Scotia's web site, the bank has increased its dividend 37 out of the last 39 years.

Things have improved a lot in the last year, and although there is still some uncertainty (as regards to the new international regulations for banks), we are certainly out of the deep end. It would certainly encourage investors to see some positive sign. Even a small increase in the dividend would be seen as a sign of confidence.

So, Scotiabank, will you give me a raise now? Or will you wait some more?

What do you think?

(Scotiabank will announce details of its third quarter results on August 31, 2010 at 7h30 AM EDT.)