Dividend Yield: TD Bank (TSE:TD) � The Passive Income Earner

Dividend Yield: TD Bank (TSE:TD) � The Passive Income Earner

Dividend Yield: TD Bank (TSE:TD)

New logo for TD BankImage via Wikipedia

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
TD has a strong foothold in the United States as you can see from the revenue generated. Recently, TD has acquired Chrysler Financial

Toronto-Dominion Fact Sheet

Some quick facts on TD to share.
  • 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%
The one year stock graph showed some nice growth in early 2010 and somewhat stayed within range for the reminder of the year offering some buy opportunities in the low 70$.

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

Even though TD does significant business in the U.S., I still consider its main competitors to be the other major Canadian banks. I have done a dividend yield analysis on RY and BMO as of writing, follow the links in the table below for more information on them.

Competitors Ticker Price Market Cap. Yield
Bank of Montreal BMO.TO $58.30 $33.03 4.71%
Bank of Nova Sotia BNS.TO $56.39 $58.81 3.48%
Royal Bank RY.TO $53.01 $75.55 3.70%
CIBC CM.TO $77.33 $30.37 4.55%
National Bank NA.TO $69.08 $11.23 3.73%
Laurentian Bank LB.TO $49.12 $1.18 3.12%


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.?


About EdR

Tant que les lions n’auront pas leurs propres historiens, les histoires de chasse continueront de glorifier le chasseur. (proverbe africain)

Posted on February 14, 2011, in training tips. Bookmark the permalink. Leave a comment.

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