January 20th, 2011 | 
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The Toronto-Dominion Bank, TD for short, is the second largest bank in Canada. Like most of the large Canadian banks, it offers a full range of financial products and services. With 71,049 employees and 19 million customers worldwide, TD is focused in 4 segments:
- Canadian Personal & Commercial Banking – 2,668M$ in revenue
- U.S. Personal & Commercial Banking – 1,219M$ in revenue
- Wealth Management – 639M$ in revenue
- Wholesale Banking – 677M$ in revenue
Toronto-Dominion Fact Sheet
- Stock Ticker: TD on both TSX and NYSE
- Market Cap.: 65.18B$
- P/E: 14.53
- EPS: 5.11$
- Dividend Yield: 3.21%
- 52-Week Low: 61.25$
- 52-Week High: 77.37$
- 52-Week Range: 80.33%
I had a look at the 10 year graph and thought I would show TD’s growth over the past 10 years and how it recovered the financial crisis.
A little bump in 2002 and a major bump in late 2008 but it manages to recover. I would be curious to know if banking fees go through increases during these bumps. I had a look at its principal competitors during that time frame too. Looks like the banking sector sneezes together.
Toronto-Dominion Dividend Growth
TD’s dividend growth is quite nice. Aside from the dividend freeze over the last couple of years due to the new banking rules, they have had 15 years of dividend increases over the last 16 years. However, I would like to highlight that over the past 16 years, TD increased dividends 21 times. They don’t get credits for multiple increases in a year when it comes to the dividend aristocrat rules.
TD’s payout ratio average to 46.58% in the last 5 years. It’s been a bit of a roller coster ride if you look at their graph but they consistently were able to increase their dividends. The 2002 drop registered a payout ratio of 162% and they still maintained their dividends. They did not increase but they did not drop either. The performance from a dividend perspective are quite surprising considering the loss of 76M$ in 2002. It doesn’t even show in the dividend growth.
Toronto-Dominion Competitors
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Thoughts
As you may have noticed by now, the Canadian banks are in my favorite list. I do not currently own Toronto-Dominion as other banks currently have better yield and since I believe in them (the Canadian banks), I tend to buy the higher yield banks first. A few of the banks have had better growth over the past 10 years if you look at the comparative graph above, but I like to see my re-invested dividend grow and compound. I find it more predictable than looking at picking which bank will grow the most.
Full Disclosure: No position in TD as of writing. I am long BNS and BMO.
Readers: Has TD been on your watch list? What do you think of its exposure to the U.S.?
I love reading your blog – dividend investor myself!
FYI, BMO's yield is wrong in your last table. Didn't check the rest, but BMO currently has the highest yield of the banks listed.
Jon
@Joncosmo
Thanks for reading and kindly pointing the oversight. I have rectified it.
hi,
came in to your blog thru a link. Canada had not been in my watchlist. need to check how the banks are doing there (after your post).
thanks
Inq
Hi,
I've been bouncing back and forth between the CDN banks. I haven't been able to make a decision yet. TD does seem to be the highest quality right now but not sure if that makes it the best pick.
Thanks for TD Bank analysis.
Just signed up to follow your blog. I share your strategy regarding building wealth through dividends.
To help gauge the performance of my portfolio, I track the dividend yield of each stock in my portfolio based on both [a] the current price of the stock as well as [b] the price I paid for the stock. This way I can compare the two in the midst of share price fluctuations as well as dividend increases/decreases.
I make use of Google Spreadsheets which allow you to embed a link for each stock to Google Finance to keep the price, change, etc. of all my stocks current [within 15 minutes] without having to update them manually.
Good luck with your blog!
Wow !! really nice blog. It will be very useful for me. So, thanks for sharing this post.
I always like to look at a stock's dividend and I'm glad you included them here! It's not as exciting as a penny stock, but it sure is consistent!
@SoloSailor
Thanks for the compliment! I do exactly what you outlined with Google Spreadsheet too.
I have a research list, my dividend tracking list and my portfolio return. I only wish I could get dividends from GoogleFinance macros…
@Anonymous
I believe TD has a large exposure to the US compared to some of the others. Some believe it has more growth potential but that's difficult to know unless you listen to all the banks conference calls to hear what the execs have to say.
TD has a great payout ratio, and a pretty darn good annual growth rate (according to buyupside.com). I have been analyzing Canadian based banks and this one has been on my list. Great post.
-Lanny
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