Is it a good company at a reasonable price? I like this bank. This is the bank I use for my chequing account and all my trading accounts. I also own shares in this bank. I would worry about buying it at this point as it seems rather expensive. I also wonder if the stock price might fall because the dividend increases in the last two years have been under 3%. I think that there is probably better stocks to buy at this point. It is testing on the expensive side.
I own this stock of Toronto Dominion Bank (TSX-TD, NYSE-TD). This stock, as all banks, was on Mike Higgs' Canadian Dividend Growth Stock list and the other dividend lists that I followed. When I sold some Metro in 2009, I bought this stock. It is the 3rd bank stock I bought.
When I was updating my spreadsheet, I noticed I have done well with this bank. I first purchased it in 2000 and then again in 2009 and 2017. I have made 13.57% per year with 9.69% from capital gains and 3.88% from dividends. Since a low in April 2025, the stock price has taken off climbing from $79.20 to $131.17, some 65.6%.
I noticed that this bank has a new chairman and that all 3 directors I was following are no longer directors. They also have a new CEO, but he was previously an officer of the company.
Also, you would think that determining Revenue would be easy. When I went to get Revenue estimates, each report was calculating Revenue differently and differently than on the statements. I could find how they calculated the revenue, but it was in the footnotes or the values used was found in the Management’s Discussion and Analysis (but not listed as revenue). However, two sites or reports did come up with the same revenue value.
If you had invested in this company in December 2015, for $1,030.56 you would have bought 19 shares at $54.24 per share. In December 2025, after 10 years you would have received $607.24 in dividends. The stock would be worth $2,457.84. Your total return would have been $3,065.08. This would be a total return of 12.99% per year with 9.08% from capital gain and 3.91% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $54.24 | $1,030.56 | 19 | 10 | $607.24 | $2,457.84 | $3,065.08 |
If you had invested in this company in December 1975, for $1,000.00 you would have bought 1250 shares at $0.80 per share. In December 2025, after 50 years you would have received $66,114.94 in dividends. The stock would be worth $161,700.00. Your total return would have been $227,814.94. This would be a total return of 15.38% per year with 10.71% from capital gain and 4.67% from dividends. This calculation takes into consideration stock splits, which means that the original cost would be lowered by these splits. (Since I have the values, I thought it might be interesting to see what this stock has done over 50 years. But good companies and keep them.)
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $0.80 | $1,000.00 | 1,250 | 50 | $66,114.94 | $161,700.00 | $227,814.94 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 3.33%. The 5, 10 and historical dividend yields are moderate at 4.44%, 4.14% and 3.57%. The dividend growth is low (below 8% per year) at 6.2% per year over the past 5 years. The last dividend increase was in 2025 and it was for 2.9%. This bank seems to increase their dividends only once a year.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2025 for Earnings per Share (EPS) is good at 36% with 5 year coverage at 48%. The DPR for 2025 for Adjusted Earnings per Share (AEPS) is fine at 50% with 5 year coverage good at 47%. The DPR for 2025 for Cash Flow per Share (CFPS) is good at 32% with 5 year coverage at 44%. The DPR for 2025 for Free Cash Flow (FCF) is non-calculable due to a negative FCF with 5 year coverage good at 16.25%. Here again there is only one place to find FCF.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 36.33% | 48.22% |
| AEPS | 50.18% | 46.60% |
| CFPS | 32.80% | 43.96% |
| FCF | -184.30% | 16.25% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2025 is high at 6.51 and currently at 5.72. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2025 which is good at 0.84 and currently at 0.84 because this is a more important ratio for a bank. The Liquidity Ratio for 2025 is good at 2.66 and 2.66 currently. However, this is not an important ratio for a bank. The Debt Ratio for 2025 is good for a bank at 1.06 and 1.06 currently. The Leverage Ratio for 2025 are good at 4.6% and currently at 4.6%.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R A | 0.84 | 0.84 |
| Lg Term R | 6.51 | 5.72 |
| Intang/GW | 0.12 | 0.10 |
| Liquidity | 2.66 | 2.66 |
| Liq. + CF | 2.35 | 2.34 |
| Debt Ratio | 1.06 | 1.06 |
| Leverage Bk | 4.6% | 4.6% |
The Total Return per year is shown below for years of 5 to 50 to the end of 2025. 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. |
|---|---|---|---|---|---|
| 2020 | 5 | 6.19% | 16.60% | 12.46% | 4.15% |
| 2015 | 10 | 7.70% | 12.99% | 9.08% | 3.91% |
| 2010 | 15 | 8.59% | 12.45% | 8.68% | 3.77% |
| 2005 | 20 | 8.71% | 10.82% | 7.48% | 3.34% |
| 2000 | 25 | 9.25% | 10.50% | 7.40% | 3.10% |
| 1995 | 30 | 10.33% | 15.54% | 10.78% | 4.77% |
| 1990 | 35 | 9.25% | 14.61% | 10.32% | 4.29% |
| 1985 | 40 | 9.83% | 13.47% | 9.70% | 3.77% |
| 1980 | 45 | 10.00% | 15.22% | 10.56% | 4.66% |
| 1975 | 50 | 10.45% | 15.38% | 10.71% | 4.67% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.25, 9.82 and 11.63. The corresponding 10 year ratios are 10.50, 11.62 and 12.74. The corresponding historical ratios are 10.50, 11.76 and 13.03. The current ratio is 14.54 based on a stock price of $129.65 and EPS estimate for 2026 of $9.82. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This would seem a good test as the P/E Ratios have been rather consistent over time.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 9.35, 10.62 and 11.71. The corresponding 10 year ratios are 9.50, 11.20 and 12.41. The corresponding historical ratios are 10.20, 11.52 and 12.89. The current ratio is 14.29 based on a stock price of $129.65 and EPS estimate for 2026 of $9.07. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $118.85. The 10-year low, median, and high median Price/Graham Price Ratios are 0.74, 0.85 and 0.97. The current ratio is 1.09 based on a stock price of $129.65. This ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 1.47. The current ratio is 1.87 based on a Book Value of $116,939M, Book Value per Share of $69.22 and a stock price of $129.65. The current ratio is 27% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2026 of $71.35. This implies a ratio of 1.82 with a stock price of $129.65 and Book Value of $120,546M. This ratio is 24% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Cash Flow per Share Ratio of 2.63. The current cash flow is negative, so I cannot do any P/CF Ratio testing. In any event, this is not a good test for banks as the cash flow fluctuates a lot over the years.
I get an historical median dividend yield of 3.57%. The current dividend yield is 3.33% based on dividends of $4.32 and a stock price of $129.65. The current dividend yield is 7% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 4.14%. The current dividend yield is 3.33% based on dividends of $4.32 and a stock price of $129.65. The current dividend yield is 19.5% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10-year median Price/Sales (Revenue) Ratio is 3.09. The current P/S Ratio is 3.43 based on Revenue estimate for 2026 of $63,883M, Revenue per Share of 37.81 and a stock price of $129.65. The current ratio is 11% above 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 still in the reasonable range, but it is above the median. Both the dividend yield tests say this and it is confirmed by the P/S Ratio test. The rest of the testing is saying that the stock price is relatively expensive.
When I look at analysts’ recommendations, I find Strong Buy (6), Buy (3), Hold (4) and Underperform (2). The consensus is a Buy. The 12 month stock price consensus is $128.67 with a high of $135.00 and low of $115.00. The consensus stock price of $128.67 implies a total return of $2.58% with a capital loss of $0.76% and dividend of $3.33% based on a current stock price of $129.65.
The most recent reviews on Stock Chase say that the stock is no longer an attractive at the current price. But some still think it is a Buy. Amy Legate-Wolfe on Motley Fool reviews this stock and thinks it is at a reasonable valuation for purchase for your TFSA. Demetris Afxentiou on Motley Fool thinks is the best big bank stock for your TFSA. This bank put out a Press Release about their 2025 fourth quarter results.
Simply Wall Street via Yahoo Finance says to buy this stock for its reliable dividend. They have one warning on this bank of Earnings are forecast to decline by an average of 5.3% per year for the next 3 years. Vardah Fill on Insider Monkey says that National Bank turns more positive on TD bank by upgrading it to Outperform from Sector Perform.
Toronto-Dominion is one of Canada's two largest banks. TD Bank operates four business segments: Canadian personal and commercial banking, US retail banking, wealth management and insurance, and wholesale banking. It mainly operates in Canada and US. 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 Friday, January 16, 2026 around 5 pm. Tomorrow on my other blog I will write about Canada’s Stagnation.... learn more on Thursday, January 15, 2026 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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 site for an index to these blog entries and for stocks followed. 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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