Our analysis is based on comparing The Toronto-Dominion Bank with the following peers – Bank of Montreal, Royal Bank of Canada, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Wells Fargo & Company, Banco Santander S.A. Sponsored ADR, Laurentian Bank of Canada and Royal Bank of Scotland Group plc Sponsored ADR (BMO-US, RY-US, BNS-US, CM-US, WFC-US, SAN-US, LB-CA and RBS-US).
The Toronto-Dominion Bank’s dividend yield is 3.46 percent and its dividend payout is 44.38 percent. This compares to a peer average dividend yield of 3.69 percent and a payout level of 44.11 percent. This combination of a relatively lower dividend yield and a higher payout ratio suggest that the dividend payout might not be sustainable. Supporting this is the company’s average dividend quality score of 58 out of a possible score of 100, which points to some weakness in being able to sustain the higher payout ratio.
Dividend Quality Overview
- Over the last twelve months (prior to April 30, 2017), TD-US paid a medium quality dividend, which represents a yield of 3.37% at the current price.
- Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 1 was high quality and 4 were medium quality.
- The ending cash balance, with a dividend coverage of 1.26x, provides a moderate cushion in case of a significant reduction of cash flows in the future.
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Over the last twelve months (prior to April 30, 2017), TD-US paid a medium quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of -1.44x), investing cash flow (coverage of -29.01x), issuance cash flow (coverage of 31.90x) and twelve-month prior cash (coverage of 0.86x), for a total dividend coverage of 2.26x.
These coverage ratio factors imply that the firm’s net cash inflow from issuance was required (in addition to operating and investment cash) to pay the dividend, which suggests a medium dividend quality.
|Dividend Yield (%)||2.49||3.08||3.22||3.63||3.4||3.46|
|Dividend Payout (%)||42.75||46.89||44.44||47.51||46.25||44.38|
A complete list of metrics and analysis is available on the company page.
The Toronto-Dominion Bank engages in providing financial products and services. The bank operates through the following business segments: Canadian Retail, U.S. Retail and Wholesale Banking. The Canadian Retail segment offers various financial products and services, as well as telephone, Internet, and mobile banking services. This segment offers financing, investment, cash management, international trade services, and day-to-day banking needs to medium and large Canadian businesses; financing options to customers at point-of-sale for automotive and recreational vehicle purchases through its auto dealer network; credit cards; direct investing, advice, and asset management services to retail and institutional clients; and home, auto, credit protection, travel, and life and health insurance products, as well as credit card balance protection products through direct channels. The U.S. Retail segment provides retail and commercial banking services, as well as wealth management services in the United States. This segment offers its financial products and services through a network stores located along the east coast from Maine to Florida; telephone, mobile, and Internet banking; and automated banking machines. The Wholesale Banking segment provides a range of capital markets, investment banking, and corporate banking products and services comprising underwriting and distribution of new debt and equity issues; advising on strategic acquisitions and divestitures; and meeting the daily trading, funding, and investment needs to companies, governments, and institutions in financial markets worldwide. The Toronto-Dominion Bank was founded on February 1, 1955 and is headquartered in Toronto, Canada.
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