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Why Toronto-Dominion Bank (TD) is a Great Dividend Stock Right Now
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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 when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a 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
Based in Toronto, Toronto-Dominion Bank (TD - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 0.37%. The retail and wholesale bank is currently shelling out a dividend of $0.7 per share, with a dividend yield of 3.66%. This compares to the Banks - Foreign industry's yield of 2.98% and the S&P 500's yield of 1.47%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.82 is up 12.4% from last year. Toronto-Dominion Bank has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 8.43%. 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. Toronto-Dominion's current payout ratio is 43%, meaning it paid out 43% of its trailing 12-month EPS as dividend.
TD is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $6.36 per share, which represents a year-over-year growth rate of 1.11%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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 presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Why Toronto-Dominion Bank (TD) is a Great Dividend Stock Right Now
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a 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
Based in Toronto, Toronto-Dominion Bank (TD - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 0.37%. The retail and wholesale bank is currently shelling out a dividend of $0.7 per share, with a dividend yield of 3.66%. This compares to the Banks - Foreign industry's yield of 2.98% and the S&P 500's yield of 1.47%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.82 is up 12.4% from last year. Toronto-Dominion Bank has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 8.43%. 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. Toronto-Dominion's current payout ratio is 43%, meaning it paid out 43% of its trailing 12-month EPS as dividend.
TD is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $6.36 per share, which represents a year-over-year growth rate of 1.11%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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 presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).