Tuesday, December 7, 2010

TD Bank

This is a bank (TSX-TD) I own and it has published unaudited 4th quarter results. The bank results are starting to come in, so I start to review all the banks that I follow. Analysts feel that dividends on banks will be raised next year. I cannot find that the five big banks saying much of anything on dividends. TD says they will provide some clarity on dividends in the next several months.

Until this latest recession, our banks gave very good dividend increases. If you look at the 5 and 10 year growth in dividends for TD, they are still at 9% and 10% per year respectively. In the last recession, which did not hit the banks like this one did, the dividend increases were down to 2.5% and 3.5% in 2003 and 2004. Most analysts feel that there will be increases in 2011.

For the year ending in October 2010, revenues are still down for the TD Bank, so there has not been any good growth here showing for the last 5 and 10 years to date. However, earnings have recovered this year. The growth in earnings over the past 5 and 10 years has been at 10% and 13% per year, respectively. If you had invested in this bank over the past 5 or 10 years, you would have made about 9% per year. Just over 3% of this return would have been from dividends. This is a very good return.

The other thing to mention is that TD is doing well, for a bank, as far as the Asset/Liability Ratio goes. It is running at 1.07 (well some other banks have a lower ratio at 1.04). The 5 and 10 year average of A/L Ratio is running at 1.06 for this bank.

The big surprise is that this bank is still on the dividend lists that I follow of Dividend Achievers and Dividend Aristocrats (see indices). Usually, stocks are tossed off when they stop increasing their dividends.

I will be holding on to the bank stocks I have at the moment, including this one. Tomorrow, I will look and see what they analysts are saying about this bank.

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 here TD Bank. See my spreadsheet at td.htm.

I bought some more Davis and Henderson (TSX-DHF) with my RIM money. Stock is expected to do well in the long term, but not the short term. Dividends will be reduced next year when it because a corporation.

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 for stocks followed and investment notes. Follow me on twitter.

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