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This is Why Toronto-Dominion Bank (TD) is a Great Dividend Stock
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Toronto-Dominion Bank in Focus
Toronto-Dominion Bank (TD - Free Report) is headquartered in Toronto, and is in the Finance sector. The stock has seen a price change of 8.03% since the start of the year. The retail and wholesale bank is currently shelling out a dividend of $0.62 per share, with a dividend yield of 4.07%. This compares to the Banks - Foreign industry's yield of 1.5% and the S&P 500's yield of 1.44%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.48 is up 7.5% from last year. Over the last 5 years, Toronto-Dominion Bank has increased its dividend 5 times on a year-over-year basis for an average annual increase of 9.39%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, Toronto-Dominion's payout ratio is 59%, which means it paid out 59% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for TD for this fiscal year. The Zacks Consensus Estimate for 2021 is $4.77 per share, representing a year-over-year earnings growth rate of 19.55%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, TD is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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This is Why Toronto-Dominion Bank (TD) is a Great Dividend Stock
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Toronto-Dominion Bank in Focus
Toronto-Dominion Bank (TD - Free Report) is headquartered in Toronto, and is in the Finance sector. The stock has seen a price change of 8.03% since the start of the year. The retail and wholesale bank is currently shelling out a dividend of $0.62 per share, with a dividend yield of 4.07%. This compares to the Banks - Foreign industry's yield of 1.5% and the S&P 500's yield of 1.44%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.48 is up 7.5% from last year. Over the last 5 years, Toronto-Dominion Bank has increased its dividend 5 times on a year-over-year basis for an average annual increase of 9.39%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, Toronto-Dominion's payout ratio is 59%, which means it paid out 59% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for TD for this fiscal year. The Zacks Consensus Estimate for 2021 is $4.77 per share, representing a year-over-year earnings growth rate of 19.55%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, TD is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).