TD Ameritrade (AMTD) is a leading provider of securities brokerage services and related technology-based financial services to retail clients and independent registered investment advisors ("RIAs"). The company provides services to individual retail investors and traders and RIAs predominantly through the Internet, a national branch network and relationships with RIAs. TD Ameritrade uses their platform to offer brokerage services to retail investors and traders under a simple, low-cost commission structure and brokerage custodial services to RIAs.  

MARKET LEADER
In May of 1975, the SEC deregulated the securities industry allowing brokerage firms to set their own commission prices for buying and selling stock, paving the road for the discount broker. Later that year, TD Ameritrade opened its doors as First Omaha Securities when the company’s founder, J. Joe Ricketts, purchased the company that had been established four years earlier as an investment bank. First Omaha Securities immediately shifted its focus to providing industry low transaction fees of $25 per 100 shares traded. 
 
Thirteen years later, the company once again disrupted the industry when they introduced touchtone telephone trading. Despite client focus groups that revealed customers would not use the system, the company forged ahead with the lengthy and costly investment. To create demand, the company reduced commissions to an unprecedented three cents per share. The promotion not only created demand from current clients, it brought in many new clients and increased the average annual trade rate by fivefold. 
 
In 1995, TD Ameritrade acquired K. Aufhauser & Co., the first company with an internet trading site. Even with the early entry into online trading, the company lagged behind other online brokerage services. Shortly after its IPO in 1997, the company introduced the country to Stuart through their “Eight Bucks a Trade” advertising campaign.  
 
The campaign was a resounding success with the number of client accounts soaring more than 450% by 1999. The company became the first to offer trading via a mobile device in 1999 and within four years, 10% of daily trading volume would be completed using mobile devices. 
 
During the next two decades, TD Ameritrade continued to grow the business and add depth to its offerings through the acquisitions of National Discount Brokers Corporation, Datek Online Holdings, TD Waterhouse, thinkorswim Group and Scottrade. Today, TD Ameritrade is a market leader with approximately $1.3 trillion in client assets and completes over 850,000 trades per day.
 

STRONG GROWTH
During the past five years, TD Ameritrade has grown revenues at a robust 15% annual rate. During the same period, net income and EPS have compounded even higher at 17.0% and 16.2% annual rates, respectively.Since 2014, client accounts and client assets have grown at 16.3% and 18.7% annualized rates, respectively. At the end of fiscal 2018, client accounts stood at 11.5 million and client assets were $1.3 trillion. Average client trades per day were 811,110 during 2018 with a 17.4% annual growth rate over the past five years.  
 
HIGHLY PROFITABLE
TD Ameritrade’s profit margin averaged nearly 25% during the last decade, including an outstanding 27% during 2018. Return on equity has averaged more than 16% for the last ten years, demonstrating the company’s ability to consistently generate profits in an increasingly competitive market.  
 
GROWING DIVIDENDS
TD Ameritrade has increased their dividend every year since inception of the dividend payment in 2011 with the dividend compounding at a 15.0% annual rate during the past five years. For fiscal 2019, the company increased the dividend payment 42.9% to $1.20 with the dividend currently yielding 2.3%.  

During 2018, TD Ameritrade generated $1.7 billion in free cash flow and returned $732 million to shareholders through dividends of $477 million and the repurchase of 4.6 million shares for $255 million at an average cost of about $55.52 per share. During fiscal 2019, the company plans to return between 30% to 40% of non-GAAP net income to stockholders through cash dividends and up to an additional 40% through share repurchases.  

Long-term investors should not discount industry disruptor TD Ameritrade, a high-quality market leader with highly profitable operations and double-digit sales,earnings and dividend growth. Buy.