TD's CEO: "No Plans to Change our Dividend Policy at This Time"
On April 2, Toronto-Dominion (TD) hosted its annual shareholder meeting (by webcast only).
When asked about the safety of the bank's dividend, TD's CEO Bharat Masrani said there are no plans to change the dividend policy at this time:
When asked about the safety of the bank's dividend, TD's CEO Bharat Masrani said there are no plans to change the dividend policy at this time:
"We entered this period with considerable strength and strong capital position, and we are in a position, we continue to be in a position, to support the recovery that will follow this crisis we have. I can also tell you that we have no plans to change our dividend policy at this time. We have a strong -- long track record of maintaining a payout to our shareholders, including through the financial crisis, I might add. So as I said, we have no plans to change our dividend policy at this time."
The worst of the economic downturn remains ahead of us, so it's especially hard to read too much into any supportive comments made by management teams at this stage.
For now, it's at least somewhat encouraging to see one of Canada's biggest banks maintain its commitment to paying dividends, even as banks' payouts come under pressure in other parts of the world due to the significant uncertainty facing the industry.
For example, management said TD has approved more than 60,000 requests to defer mortgage payments in the past few days alone. Mortgages account for about a third of TD's total loans, and millions of people have lost their jobs in recent weeks.
During this crisis, TD and other banks play an especially essential role in helping businesses and households build a financial bridge that can last until normal economic conditions eventually return.
As we discussed in our March 29 note on TD, this has potential to increase the amount of financial and political pressure on banks' dividends since shareholder distributions reduce the amount of capital a bank can lend out.
For now, TD joins peer CIBC in hoping to maintain its dividend while navigating through this unprecedented pandemic. We maintain our Safe Dividend Safety Score on TD and will continue monitoring the situation.
