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The Toronto-Dominion Bank's Dividend Analysis

Assessing the Sustainability and Growth of TD's Dividends

The Toronto-Dominion Bank (NYSE:TD) recently announced a dividend of $1.02 per share, payable on 2024-04-30, with the ex-dividend date set for 2024-04-08. 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 delve into The Toronto-Dominion Bank's dividend performance and assess its sustainability.

What Does The Toronto-Dominion Bank Do?


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.

The Toronto-Dominion Bank's Dividend Analysis
The Toronto-Dominion Bank's Dividend Analysis

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 distributed quarterly. The Toronto-Dominion Bank has also increased its dividend annually since 1995, earning it the status of a dividend aristocrata distinction for companies with at least 29 consecutive years of dividend increases. Below is a chart showing annual Dividends Per Share to track historical trends.

Breaking Down The Toronto-Dominion Bank's Dividend Yield and Growth

The Toronto-Dominion Bank currently has a trailing 12-month dividend yield of 4.86% and a forward dividend yield of 5.07%, indicating 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%, which increased to 7.60% per year over a five-year horizon, and 8.80% over the past decade.

Considering 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 7.01%.

The Toronto-Dominion Bank's Dividend Analysis
The Toronto-Dominion Bank's Dividend Analysis

The Sustainability Question: Payout Ratio and Profitability

To gauge the sustainability of dividends, examining the company's payout ratio is crucial. The Toronto-Dominion Bank's current dividend payout ratio is 0.50, suggesting a balance between distributing earnings as dividends and retaining funds for future growth and stability. The bank's profitability rank stands at 6 out of 10, indicating fair profitability, with a consistent record of positive net income over the past decade.

Growth Metrics: The Future Outlook

For dividend sustainability, robust growth metrics are essential. The Toronto-Dominion Bank's growth rank is 6 out of 10, pointing to a fair growth outlook. The bank's revenue per share and 3-year revenue growth rate of 6.60% annually somewhat lag behind 50% of global competitors. Its 3-year EPS growth rate of 14.20% annually also underperforms against 44.8% of global competitors. Additionally, The Toronto-Dominion Bank's 5-year EBITDA growth rate of 6.20% trails 52.9% of global competitors.

Next Steps

Considering The Toronto-Dominion Bank's consistent dividend payments, growth rate, balanced payout ratio, and profitability, the dividends appear sustainable. However, the growth metrics suggest there may be areas where the bank could enhance its performance to maintain its competitive edge. For investors, these factors are critical in evaluating whether The Toronto-Dominion Bank remains an attractive option for those seeking stable dividend income. Will The Toronto-Dominion Bank continue to uphold its dividend aristocrat status in the years to come? This is a key question for value investors to ponder as they assess the bank's long-term potential.

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.