Reviewing Toronto Dominion Bank (NYSE:TD) and Sound Financial Bancorp (NASDAQ:SFBC)

Sound Financial Bancorp (NASDAQ:SFBC) and Toronto Dominion Bank (NYSE:TD) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, valuation, institutional ownership, risk and dividends.

Dividends

Sound Financial Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 1.8%. Toronto Dominion Bank pays an annual dividend of $3.15 per share and has a dividend yield of 2.6%. Sound Financial Bancorp pays out 26.9% of its earnings in the form of a dividend. Toronto Dominion Bank pays out 46.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Sound Financial Bancorp has increased its dividend for 2 consecutive years and Toronto Dominion Bank has increased its dividend for 12 consecutive years. Toronto Dominion Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

68.8% of Sound Financial Bancorp shares are owned by institutional investors. Comparatively, 52.4% of Toronto Dominion Bank shares are owned by institutional investors. 12.3% of Sound Financial Bancorp shares are owned by insiders. Comparatively, 0.1% of Toronto Dominion Bank shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Sound Financial Bancorp and Toronto Dominion Bank”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sound Financial Bancorp	$61.52 million	1.99	$7.16 million	$3.12	15.30
Toronto Dominion Bank	$87.34 billion	2.29	$14.66 billion	$6.73	18.07

Toronto Dominion Bank has higher revenue and earnings than Sound Financial Bancorp. Sound Financial Bancorp is trading at a lower price-to-earnings ratio than Toronto Dominion Bank, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Sound Financial Bancorp has a beta of 0.01, indicating that its stock price is 99% less volatile than the S&P 500. Comparatively, Toronto Dominion Bank has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Sound Financial Bancorp and Toronto Dominion Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sound Financial Bancorp	0	0	1	0	3.00
Toronto Dominion Bank	0	4	4	1	2.67

Toronto Dominion Bank has a consensus target price of $156.00, indicating a potential upside of 28.26%. Given Toronto Dominion Bank’s higher probable upside, analysts plainly believe Toronto Dominion Bank is more favorable than Sound Financial Bancorp.

Profitability

This table compares Sound Financial Bancorp and Toronto Dominion Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sound Financial Bancorp	12.89%	7.31%	0.74%
Toronto Dominion Bank	14.41%	14.88%	0.81%

Summary

Toronto Dominion Bank beats Sound Financial Bancorp on 14 of the 18 factors compared between the two stocks.

About Sound Financial Bancorp

Sound Financial Bancorp, Inc. operates as the bank holding company for Sound Community Bank that provides banking and other financial services for consumers and businesses. It accepts various deposits products comprising savings, money market deposit, NOW, and demand accounts, as well as certificates of deposit. The company also offers loans secured by first and second mortgages on one-to four-family residences; home equity loans, including fixed-rate loans and variable-rate lines of credit; commercial and multifamily real estate loans; construction loans secured by single-family residences, and commercial and multifamily real estate; land loans; commercial business loans to finance commercial vehicles and equipment, as well as loans secured by accounts receivable and/or inventory; and secured and unsecured consumer loans, such as new and used manufactured homes, floating homes, automobiles, boats, and recreational vehicle loans, and loans secured by deposit accounts. The company was founded in 1953 and is headquartered in Seattle, Washington.

About Toronto Dominion Bank

The Toronto-Dominion Bank, together with its subsidiaries, provides various financial products and services in Canada, the United States, and internationally. It operates through four segments: Canadian Personal and Commercial Banking, U.S. Retail, Wealth Management and Insurance, and Wholesale Banking. The company offers personal deposits, such as chequing, savings, and investment products; financing, investment, cash management, international trade, and day-to-day banking services to businesses; and financing options to customers at point of sale for automotive and recreational vehicle purchases. It also provides credit cards and payments; real estate secured lending, auto finance, and consumer lending services; point-of-sale payment solutions for large and small businesses; wealth and asset management products, and advice to retail and institutional clients through direct investing, advice-based, and asset management businesses; and property and casualty insurance, as well as life and health insurance products. The company also provides capital markets, and corporate and investment banking products and services, including underwriting and distribution of new debt and equity issues; advice on strategic acquisitions and divestitures; and trading, funding, and investment services to corporations, governments, and institutions. It offers its products and services under the TD Bank and America's Most Convenient Bank brand names. The Toronto-Dominion Bank was founded in 1855 and is headquartered in Toronto, Canada.