Another Madden Comment TD Bank (TD TSX)
Latest purchase August 2022 @ $85.60:
TD is Canada’s second-largest bank and may be on the verge of becoming America’s sixth-largest bank as well should its contentious acquisition of First Horizon close as planned. Recent turmoil among U.S. regional and community banks affords TD and other large banks an excellent opportunity to leverage its financial and reputational strength toward market share gains in the U.S. TD earns a 16 per cent return on shareholder’s equity and has grown earnings per share at a nine per cent rate over the last decade, with a commensurate increase in its dividend. Currently offering a 4.9 per cent yield, and with dividends likely to continue growing at a high single-digit pace, we see a logical and visible path to continued low double-digit total returns over a cycle. This is a pattern that has allowed TD and other Canadian banks to outperform the S&P TSX Composite in 17 of the last 25 years. This pattern of outperformance is quite unlike its U.S. peers, even the best of which have no better than coin-flip odds of beating the S&P 500. Canadian banks are better managed, better governed, better regulated and overall just better businesses than U.S. banks – period.