I own this stock of Toronto Dominion Bank (TSX-TD, NYSE-TD). This is one of the big 5 banks of Canada. I think all Canadians should have at least one bank in their portfolio. I have three banks of BMO, RY and TD.
When I was updating my spreadsheet, I noticed that they seemed to have had a good year with revenue up by 7.3% and EPS up by 9.3%. They raised their dividends higher in 2018 than in previous few years. Last dividends increase in 2018 was 11.67%. Increase in dividends in years 2015 was 8.7%, for 2016 was 8% for 2017 was 8.8% and now for 2018 an increase of 11.1%. Financial year end is October 31 for this stock, so last financial year date is October 31, 2018.
Dividend growth is moderate as is the dividend yields. Mostly the increases have been in the 10 to 11% range. The last increase was for 11.67% and it occurred in 2018. The current dividend yield is 3.89%. The 5, 10 and historical median yields are 3.50%, 3.62% and 3.50%. They have a moderate dividend rate and moderate dividend increases.
I believe that they can afford their dividends. The Dividend Payout Ratio for 2018 for EPS is 43% with 5 year coverage at 45%. The DPR for CFPS for 2018 is 31% with 5 year coverage at 29%.
For banks you need to look at Long Term Debt/Coverage Assets Ratio. For TD bank for 2018, this ratio is 0.85. The other debt ratio that is applicable to banks is the Debt Ratio. The current one for this bank is 1.06. This is a good ratio for a bank.
The Total Return per year is shown below for years of 5 to 43 to the end of 2018. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
As you can see from the chart below, the total return for most years is quite good. The lowest seems to be the last 5 years at 10.12% per year growth.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 10.01% | 10.12% | 6.28% | 3.84% |
| 2008 | 10 | 8.26% | 16.85% | 12.06% | 4.78% |
| 2003 | 15 | 10.55% | 11.87% | 8.08% | 3.78% |
| 1998 | 20 | 10.89% | 12.08% | 8.43% | 3.65% |
| 1993 | 25 | 11.05% | 18.72% | 10.73% | 7.99% |
| 1988 | 30 | 10.59% | 13.23% | 9.51% | 3.72% |
| 1983 | 35 | 10.21% | 14.83% | 10.50% | 4.33% |
| 1978 | 40 | 11.33% | 16.61% | 11.32% | 5.29% |
| 1975 | 43 | 11.01% | 15.47% | 10.88% | 4.59% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.40, 12.41 and 13.33. The corresponding 10 year ratios are 11.41, 12.52 and 13.58. The corresponding historical ratios are 11.42, 11.55 and 13.92. The current P/E Ratio is 10.16 based on a stock price of $68.87 and 2019 EPS estimate of $6.78. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $78.56. The 10 year low, median, and high median Price/Graham Price Ratios are 0.87, 0.97 and 1.07. The current P/GP Ratio is 0.88 based on a stock price of $68.87. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 1.61. The current P/B Ratio is 1.70 based on a stock price of $68.87, Book Value of $79,047M and Book Value per Share of $40.45. The current P/B Ratio is 5.63% above the 10 year median ratio. This stock price testing suggests that the stock price is reasonable but above the median.
I get an historical median dividend yield of 3.50%. The current dividend yield is 3.89% based on dividends of $2.68 and a stock price of $68.87. The current yield is 11.18% above the historical median yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 3.13. The current P/S Ratio is 3.19 based on 2019 Revenue Estimate. The current ratio is 1.89% above the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and around the median.
Putting all the testing together it would suggest that the stock price is relatively reasonable. My favourite test using the dividend yield shows that the stock price is below the median.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (8), Hold (2) and Underperform (1). The consensus would be a Buy. The 12 month stock price consensus is $85.27. This implies a total return of 27.70% with 23.81% from capital gains and 3.89% from dividends.
Doug Alexander on Financial Post says the bank is on a deal-making winning streak. Thomas Auclair of Simply Wall Street talks about the banks P/E Ratio. Joey Frenette on Motley Fool thinks that this bank is selling at a good bargain price. See what analysts are saying about this bank on Stock Chase. Analysts seem to like to this 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 42% ownership stake in TD Ameritrade, a discount brokerage. Its web site is here Toronto Dominion Bank.
The last stock I wrote about was about was Calian Group Ltd (TSX-CGY, OTC- CLNFF) ... learn more. The next stock I will write about will be Bank of Nova Scotia (TSX-BNS, NYSE-BNS) ... learn more on Wednesday, January 16, 2019 around 5 pm. Tomorrow on my other blog I will write about Choice Properties REIT.... learn more on Tuesday, January 15, 2018 around 5 pm. http://www.spbrunner.blogspot.com/2018/01/bank-of-nova-scotia.html
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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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