TD Ameritrade Holding Corp. announced plans Tuesday to begin paying investors a dividend of 5 cents per share even though its fourth-quarter net income dropped 27 percent to $114 million.
CEO Fred Tomczyk talked about why the online brokerage decided to offer a dividend during a conference call with analysts:
"We have said for some time now that with our strong balance sheet, combined with our unique business model, that generates a significant amount of annual cash flow, that a dividend would make sense at some point. Well, we believe that now is a good time for us to introduce a quarterly dividend to our shareholders of 5 cents per quarter.
"While we continue to see a challenging and uncertain environment as we look forward, we believe our business model has demonstrated its resiliency in a very difficult environment, and we continue to take an opportunistic approach to invest in some growth, acquisitions, and share buybacks, and now a dividend as a way to build long-term core earnings power, and to enhance value for our shareholders."