The Best Dividend Bank Stock In (North) America

Oct. 16, 2018 9:38 PM ETThe Toronto-Dominion Bank (TD), TD:CA47 Comments
The Affluent Tortoise profile picture
The Affluent Tortoise


  • TD’s 5-year annualized total shareholder return is 16.7% making it one of the best long term investments in the North American banking sector for total shareholder returns.
  • Over a 10-year time horizon, TD has been unparalleled in delivering superior returns, surpassing both its Canadian and its American peers including Money Center Banks (C, BAC, JPM) and Super-Regional.
  • TD combines the best of both the U.S. and Canadian banking sectors, giving investors access to stability and growth in one security.
  • TD Bank’s 11% annualized dividend growth rate over the last 20 years is a testament to its commitment to return capital to shareholders. Its strong dividend growth history dates back over 160 years.
  • With strong earning growth and a low payout ratio, TD is well-positioned for impressive dividend growth.

Investment Thesis

Toronto-Dominion Bank (NYSE:TD) has the best dividend growth profile in the industry. Encompassing strong earnings growth and the lowest dividend payout ratio among its domestic peers, TD is poised to continue outpacing its rivals in dividend growth. Over the last 20 years, TD has achieved a dividend growth rate of 11%, contributing to its out-performance among Canadian and American banks. TD is currently trading ~10% below its fair value giving investors the opportunity for stock price appreciation as well as dividend growth. Beyond its growth profile, TD is also a well operated and lower risk bank that has an impressive record of rewarding investors with sector leading total returns.

Company Overview

Trading on both the TSX and the NYSE, TD Bank has 25M customers worldwide, including 12M online and mobile customers. TD Operates in three major segments, Canadian Retail Banking, U.S. Retail Banking and Wholesale Banking (operating under the brand TD Securities). TD Bank is a best in class North American financial institution that offers investors the best of both the U.S. and Canadian banking businesses. TD is a dividend growth power house and has been one of the best performing financials in North America over the last decade. Possessing a high quality loan portfolio and perennial cost advantages over its Canadian peers, the bank is a stable business that has a long runway to continue growing its dividend. As a prudent lender and subject to Canada’s highly regulated banking standards, TD Bank is well-capitalized with a Common Equity Tier 1 ratio of 13.1% and total capital ratio of 15.4% as of the end of Q3 2018.

A Leading North American Retail Bank

Source: TD Q3 Investor Presentation

Encompassing strong positions in both the profitable Canadian banking oligopoly as well as the growth potential of the robust domestic

This article was written by

The Affluent Tortoise profile picture
I am a value-oriented investor who seeks out high-quality companies with long histories of dividend growth. I believe that patient investors who build a core portfolio of dividend paying equities can achieve their retirement goals without taking on unnecessary risk. Dividend growth profiles are the best indicators of management's commitment to returning cash to shareholders. Dividend growth investing involves identifying quality companies with competitive advantages that provide visibility towards future cash flow growth. Warren Buffet once wrote "If you don't find a way to make money while you rest, you will work until you die". Fundamental analysis and patience are the tools I use to build a portfolio of equities that will enable my very comfortable retirement. Join me in exploring value and growth-at-a-reasonable-price opportunities and in building your own income-producing portfolio of dividend stocks. I am an investor with over 20 year of experience in the market. I hold a B.Mgt and an MBA where I enjoyed studying both corporate and personal finance.

Disclosure: I am/we are long C, RY, TD, BNS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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