In keeping with its strategy of consistently enhancing shareholder value, The Toronto-Dominion Bank (TD) announced a new capital deployment plan. The company intends to initiate share buyback program
Toronto-Dominion announced its intention to buyback nearly 12 million common shares, representing approximately 1.3% of the outstanding share as of May 21, 2013. However, this share buyback plan is still subject to the approvals of the Office of the Superintendent of Financial Institutions Canada (OSFI) and the Toronto Stock Exchange (TSX).
Toronto-Dominion will likely file a notice of intention with the TSX soon. Upon acceptance of the notice, the company expects to start repurchase of shares by mid to late Jun 2013 and continue for almost a year.
Toronto-Dominion’s decision regarding the share buyback program evinces its strong liquidity and capital position. Moreover, it has allocated approximately $1 billion in capital to share buybacks.
Additionally, over the last 2 years, Toronto-Dominion raised its quarterly cash dividend 5 times. The last rise was in Feb 2013 when the company hiked its quarterly dividend 5.2% to C$0.81 per share. In fiscal 2012, the company returned C$2.62 billion ($2.61 billion) to shareholders in the form of dividends.
Among other foreign banks, in May 2013, HSBC Holdings plc (HBC) announced its plans to start a share buyback program by next year, subject to shareholders’ and regulatory approvals. Additionally, in Jan 2013, Bank of Montreal (BMO) received approvals from the TSX and OSFI to buyback up to 15 million shares from Feb 1, 2013 to Jan 31, 2014.
Furthermore, in Sep 2012, Canadian Imperial Bank of Commerce’s (CM) intention to buyback shares was accepted by the TSX. Hence, in fiscal 2012, CIBC repurchased 2.02 million shares worth C$157 million ($156.3 million).
We believe that Toronto-Dominion’s latest share buyback program reflects its commitment to boost shareholder value. Moreover, this will enhance investors’ confidence in the stock as well.
Toronto-Dominion currently carries a Zacks Rank #3 (Hold).
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