Exploring TD's Dividend History, Yield, Growth, and Sustainability
The Toronto-Dominion Bank(TD, Financial) recently announced a dividend of $0.96 per share, payable on 2023-10-31, with the ex-dividend date set for 2023-10-05. 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 deep dive into The Toronto-Dominion Bank's dividend performance and assess its sustainability.
Company Overview: The Toronto-Dominion Bank
Toronto-Dominion 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.
Historical Dividend Performance of The Toronto-Dominion Bank
The Toronto-Dominion Bank has maintained a consistent dividend payment record since 1989. Dividends are 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 28 years.
Understanding 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 4.88% and a 12-month forward dividend yield of 4.94%. This suggests 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 7.20%. Extended to a five-year horizon, this rate increased to 8.10% per year. And over the past decade, The Toronto-Dominion Bank's annual dividends per share growth rate stands at 9.20%.
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 7.20%.
Assessing Dividend Sustainability: 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 2023-07-31, The Toronto-Dominion Bank's dividend payout ratio is 0.49.
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 2023-07-31, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Future Growth Prospects of The Toronto-Dominion Bank
To ensure the sustainability of dividends, a company must have robust growth metrics. The Toronto-Dominion Bank's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
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 14.90% per year on average.
Lastly, the company's 5-year EBITDA growth rate of 10.50% further solidifies its growth prospects.
Conclusion
The Toronto-Dominion Bank's consistent dividend payment record, coupled with its solid growth prospects, makes it a compelling choice for dividend-focused investors. However, it's essential to keep an eye on the company's dividend growth rate, payout ratio, and overall profitability to ensure the sustainability of future dividends. With a fair growth outlook, The Toronto-Dominion Bank appears well-positioned to maintain its dividend aristocrat status.
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