Introduction:
Welcome back to my weekly stock analysis.
The Toronto-Dominion Bank (NYSE: TD) Sector: Banks (Financial Services)
Company Strengths & Risks:
Toronto Dominion bank is a canadian bank formed from the merger of the Bank of Toronto and the Dominion bank. It is one of the big five banks (Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, and TD).
Strengths:
- Decent dividend growth
- Average PE ratio
- healthy payout ratios
- Lots of cash on hand (stress test)
- foreign finance sector diversification for the US investors
Risks:
- Foreign withholding tax
- several court cases including increasing credit limits and overdraft amounts without notifying customers
- institutional ownership of 56.11% (yahoo finance)
- stress test may have prevented buybacks and dividend increases for the past year
- price near ATH
- low ROA
Financial History and numbers
TD: Numbers from Seeking Alpha and Macrotrends as of March 28 2020
| Stock | TD |
|---|---|
| P/E Ratio | 12.79 |
| Stock price | $65.93 |
| Current Annual Payout/Share | $2.43 |
| Yield | 3.69% |
| 10 Yr Div Growth Rate | 6.99% |
| 3 Yr Div Growth Rate | 7.63% |
| 1 Yr Div Growth Rate | 6.76% |
| Years Of Growth | 5 |
| Current Payout Ratio | 45.20% |
| Free Cash Flow / Share | 5.06 (macrotrends reports 94.8187) |
| Revenue (ttm) | 38.391B |
| Debt / Equity Ratio | 0.12 |
| Debt / EBITDA | - |
| EPS | 1.38 |
| Cash on hand | 458.084B |
| ROE | 13.5% |
| ROA | 0.7% |
TD is an oddity to me. The stock has decent dividend growth rates, and appreciates well. The issue is finding an entry point. This stock seems to only crash when the market crashes. The dips aren’t significant enough to find a value play from what I can see. The price seems to want to converge at 70 and perhaps break out but other than that, fair value is hard to say. The PE ratio is healthy, the yield is nice while still giving capital appreciation. They have a lot of cash on hand ever since covid started. I can feel that they're just waiting for the greenlight on buybacks and dividend increases. The debt to equity ratio is low but banks tend to fa
... keep reading on reddit ➡
I was going to write something super long and windy, but I'll keep things short and sweet.
Overall Investing Thoughts:
I personally feel like people are way too crazy and overhyped about Tech & Healthcare stocks rn when both of these sectors are extremely overvalued. I probably scroll past 20 posts per day about whether Microsoft at X price on X date is a good buy before I call it quits haha.
Nonetheless, I feel like one of the sectors being overlooked is Banks/Financials, due to the nature of Federal policies/interventions and other detrimental affects of the Big Rona on business and loan repayments.
Obviously in the SHORT-TERM, these companies are going to face hardships and rocky-seas, however if you are long-term investor, these companies are at a pretty solid sale.
As good ole, Warren Buffet says:
>"It's better to buy a wonderful company at a fair price than a fair company at a wonderful price"
I believe that some top financial banks are at a good sale to be held onto for the long-term. Heck, even Buffet increased his stakes in Bank of America just recently. (Although I will say I think BAC is a little overvalued rn)
JPM is a strong company I'll mention that is at a decent sale at a 23% Margin of Safety (MOS) at it's current price point, as well as Royal Bank of Canada ($RY). I will note that $RY is only at a 15% MOS and I don't have any positions in $RY, but I would have if: 1) I didn't already have too many bank stocks, 2) I didn't like TD more, and 3) if I had more capital since I'm a small time, young "investor".
*I got my MOS from Gurufocus's DCF calculator*
But I digress...
TD Snapshot:
26MM global customers, 2300+ locations, retail-banking focused company, and 3 Business Segments: Canadian Retail (60% of revenue), U.S. Retail (28% of revenue) and Wholesale Banking (12% of revenue).
Relevant news is the Charles-Schwab + TD Ameritrade Merger. Don't think this really has an affect on TD since TD Ameritrade is a separate BUT RELATED entity to TD, but I thought this should be mentioned.
From Yahoo Finance:
PE (TTM): 9.97
PB (MRQ): 1.26
EPS (TTM): 4.52
From Seeking Alpha:
Dividend Yield: 5.04%
Quarterly payouts of $0.5815 (equals $2.27 annually per share)
10% Annualized Dividend Growth (here)
The dividend yield and its historical growth is really solid for this comp
... keep reading on reddit ➡
Increased rate will come into effect November 1st (today). It will impact customers who hold variable rate mortgages, or customers who hold fixed rate mortgages that are up for renewal in the near future.
Typically, when one bank increases their prime rate, other banks follow in the coming weeks or months, which will end up impacting a lot of people.
Edit 1: Screenshot from Bloomberg: http://imgur.com/a/Mhzys
Edit 2: CBC just came out with an article: http://www.cbc.ca/news/business/td-bank-mortgage-prime-rate-1.3830878
Trying to set up ynab for the first time but when I try to add a account I get the error message "We Couldn't Connect to TD Canada Trust (Toronto-Dominion)Each institution is different, so setting up Direct Import isn't an exact science. Check our troubleshooting guide, or continue setting up the account and connect your institution later." but when I look at the status page it says that td has a connection of 77% in the last 24 hours. Has anyone here been able to connect to Toronto Dominion or am I just the unlucky 23% of people who cant access?
