The Toronto-Dominion Bank's Dividend Analysis
Assessing the Upcoming Dividend and Financial Health of TD
The Toronto-Dominion Bank (NYSE:TD) recently announced a dividend of $1.02 per share, payable on 2024-01-31, with the ex-dividend date set for 2024-01-09. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into The Toronto-Dominion Bank's dividend performance and assess its sustainability.
What Does The Toronto-Dominion Bank Do?
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The Toronto-Dominion Bank is one of Canada's two largest banks and operates three business segments: Canadian retail banking, U.S. retail banking, and wholesale banking. The bank's U.S. operations span from Maine to Florida, with a strong presence in the Northeast. It also has a 13% ownership stake in Charles Schwab.
A Glimpse at The Toronto-Dominion Bank's Dividend History
The Toronto-Dominion Bank has maintained a consistent dividend payment record since 1989, with dividends currently distributed on a quarterly basis. The Toronto-Dominion Bank has increased its dividend each year since 1995. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 29 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down The Toronto-Dominion Bank's Dividend Yield and Growth
As of today, The Toronto-Dominion Bank currently has a 12-month trailing dividend yield of 4.41% and a 12-month forward dividend yield of 4.66%, suggesting an expectation of increased dividend payments over the next 12 months. Over the past three years, The Toronto-Dominion Bank's annual dividend growth rate was 7.30%. Extended to a five-year horizon, this rate increased to 7.60% per year. And over the past decade, The Toronto-Dominion Bank's annual dividends per share growth rate stands at 8.80%. Based on The Toronto-Dominion Bank's dividend yield and five-year growth rate, the 5-year yield on cost of The Toronto-Dominion Bank stock as of today is approximately 6.36%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-10-31, The Toronto-Dominion Bank's dividend payout ratio is 0.69.
The Toronto-Dominion Bank's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks The Toronto-Dominion Bank's profitability 6 out of 10 as of 2023-10-31, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
The Toronto-Dominion Bank's growth rank of 6 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and The Toronto-Dominion Bank's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. The Toronto-Dominion Bank's revenue has increased by approximately 6.60% per year on average, outperforming approximately 51.96% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, The Toronto-Dominion Bank's earnings increased by approximately 14.20% per year on average, outperforming approximately 65.91% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 6.20%, outperforms approximately 43.19% of global competitors.
Next Steps
In conclusion, The Toronto-Dominion Bank's upcoming dividend, consistent dividend growth rate, manageable payout ratio, and solid profitability and growth metrics paint a picture of a financially healthy institution. These factors suggest that the bank is well-positioned to continue its tradition of rewarding shareholders with dividends. Investors considering TD for its dividend prospects should also take note of the bank's ability to navigate the economic landscape and maintain a competitive edge in the banking industry. With this in mind, could The Toronto-Dominion Bank be your next dividend investment? GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
