I own this stock of Toronto Dominion Bank (TSX-TD, NYSE-TD). I bought stock in this bank in 2000 and 2009. I sold some in 2017 as I had a too high a percentage of this stock in my portfolio. (That was because I bought some in a bear market and I had a great capital gain because of that.) I have made a total return of 13.40% with 9.55% from capital gains and 3.85% from dividends. For the stock I bought in 2000, I am making a yield of 16.48% on my original investment. For the stock I bought in 2009, I am making 12.41% on my original investment.
If you had bought 1220 shares for $1,000.40 in 1976, some 42 years ago, they would now be worth $88,852.60 and you would have received $37.674.52 in dividends to date.
When I was updating my spreadsheet, I noticed that TD Bank has done quite well for their shareholders over a long period of time. Total Returns are slowing down for this bank. However, I have noticed the same trend with Royal Bank of Canada (TSX-RY, NYSE-RY) and Bank of Montreal (TSX-BMO, NYSE-BMO).
The dividend yields are moderate (2% to 4% ranges). The current dividend yield is 4.05%. The 5, 10 and historical median dividend yields are 3.75%, 3.62% and 3.50%. The dividend increases are also moderate (8% to 14% ranges). See chart below.
The Dividend Payout Ratios are fine. The DPR for 2019 for EPS is 46% with 5 year coverage at 45%. The DPR for CFPS is 36% with 5 year coverage at 29%. I am going to skip the Free Cash Flow ratio testing as there seems to be big differences in what different sites are reporting in FCF. Wall Street Journal says the FCF for 019 if 117,643M and Market Watch is a negative $394M. Since I started to look at FCF I have found that sites can vary greatly on what they say it is.
Debt Ratios are fine. Because this is a bank, we need to look at asset coverage of the Long Term Debt. The Debt/Covering Asset Ratio for 2019 is 0.88 and this is fine. The Debt Ratio is 1.07 for 2019 and this is fine for a bank. The Leverage and Debt/Equity Ratios at 16.14 and 15.14 for 2019 are rather normal for a bank.
The Total Return per year is shown below for years of 5 to 44 to the end of 2019. 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 chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2014 | 5 | 9.45% | 9.43% | 5.58% | 3.84% |
| 2009 | 10 | 9.01% | 12.20% | 8.24% | 3.96% |
| 2004 | 15 | 10.13% | 11.08% | 7.40% | 3.68% |
| 1999 | 20 | 10.98% | 10.07% | 6.84% | 3.23% |
| 1994 | 25 | 11.50% | 15.83% | 11.04% | 4.79% |
| 1989 | 30 | 9.75% | 12.89% | 9.25% | 3.64% |
| 1984 | 35 | 10.24% | 14.71% | 10.38% | 4.33% |
| 1979 | 40 | 10.69% | 16.72% | 11.29% | 5.44% |
| 1975 | 44 | 11.01% | 15.44% | 10.80% | 4.64% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.86, 12.10 and 13.26. The corresponding 10 year ratios are 11.20, 12.32 and 13.41. The corresponding historical ratios are 11.42, 11.47 and 13.84. The current P/E Ratio is 10.90 based on a stock price of $73.00 and EPS estimate for 2020 of $6.70. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $82.53. The 10 year low, median, and high median Price/Graham Price Ratios are 0.87, 0.96 and 1.05. The current P/GP Ratio is 0.88 based on a stock price of $73.00. 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 1.62 based on a Book Value of $87,701M, Book Value per Share of $45.19 and a stock price of $73.00. The current ratio is 0.2% higher than the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and around the median.
I get an historical median dividend yield of 3.50%. The current dividend yield is 4.05% based on dividends of $2.96 and a stock price of $73.00. The current yield is 16% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 3.62%. With a current yield of 4.05%, the current yield is some 12% above the 10 year median dividend 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 3.16. The current P/S Ratio is 3.29 based on 2020 Revenue estimate of $40,248M, Revenue per Share of $22.21 and a stock price of $73.00. The current P/S Ratio is 4% higher than the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably reasonable. Testing is showing the stock price from cheap to reasonable, but above the median. However, the only test to show the stock price as cheap is the P/E Ratio which is not a reliable test in my mind.
Is it a good company at a reasonable price? I think this is a great bank to own. I plan to hold on to the shares that I currently have. The stock price seems to be around a reasonable price.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (5), Hold (6) and Sell (1). The consensus is a Buy. It is unusual to see a Sell recommendation. The 12 month stock price if $79.13. This implies a total return 12.45% with 8.40% from capital gains and 4.05% from dividends.
See what analysts are saying on Stock Chase. Some like it and others think that growth will slow in the future. Simon Wong on Motley Fool thinks this is a great stock for your TFSA and buying using dollar-cost averaging A writer on Simply Wall Street says institutions own 53% of the outstanding shares. A writer on Simply Wall Street thinks that this stock is fairly valued. Nichola Saminather on Financial Post says TD may do more restructuring in 2020.
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. 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 15, 2020 around 5 pm. Tomorrow on my other blog I will write about Brookfield Infrastructure Partners.... learn more on Tuesday, January 14, 2020 around 5 pm.
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.
No comments:
Post a Comment