Wednesday, December 16, 2009

Toronto Dominion Bank

As I said yesterday, since the Canadian Banks have now reported, I will start reviewing them. The first thing to note is dividends. Since none have upped their dividends this year, (except for Laurentian Bank), I heard that the Canadian banks will be taken off the dividend lists I follow. I looked at these lists today and find they are still there. Most people seem to think that the big five banks will not be increasing their dividends until at least at the end of 2010 or early 2011. I cannot find the banks saying anything, so I guess we will just have to wait.

I first bought this bank (TSX-TD) in 2000 and I bought some more this year. The price of this stock was too good this year to pass up. However, I did sell as small amount of shares (200) when they went up $10 a share. I still have lots. On this stock, I have made a return of 13% per year. I should point out that on the stock I bought in 2000; I have made a return of 8.8% per year. On the stock I bought this year, I have made a return of just over 25% per year.

Considering we are in a recession that has hit banks hard, the return on the stock I bought in 2000 is good. The other thing to point out is the dividends. Almost 3.5% of my return is in dividends. I have a lot of bank stock and generally, the return on Canadian bank stock has been very good. Even though the dividend was not increased this year, over the last 5 years, the growth in dividends has still been very good at 12.4% per year.

The other only bright spot in growth in this stock is the growth in Book Value. The other growth figures, on things like revenues and earnings are not good, but this is to be expected at this point in the business cycle. Looking at the Return on Equity (ROE), this was only 7.6% for the financial year ending October 2009. The 5 year average of 13.8% is, of course, much better.

When we look at the Asset/Liability Ratio, I find it low at 1.07. However, all banks are low and are generally at around 1.04. So this is better than most. The other thing is banks tend to have lots of debt. The leverage (or Asset/Book Value ratio) is 14.4this is high, but it is better than the 5 year average of 19. TD bank also tends to have a better than average A/BV ratio that other banks in Canada.

I am happy with this stock and I intend to hold on to what I have. The only thing I worry about is having too high a percentage of my portfolio in one stock or in one sector. I might in the future sell some if this stock becomes too high a percentage of my portfolio.

TD is a bank with a full range of financial products and services for individuals and corporations in Canada, USA and internationally. Financial products and services include Canadian Personal and Commercial Banking; Wealth Management; U.S. Personal and Commercial Banking; and Wholesale banking products. Its web site is See my spreadsheet at

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at

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