The market has been anything but stable in 2023. As a result, many stocks are now trading down over 5% this year, making them stellar picks to buy at a discount.
One such example is Toronto-Dominion Bank (TSX:TD). The bank is down over 5% this year. Let’s take a look at whether TD is a buy today.
Meet TD Bank
TD is the second-largest of Canada’s big banks. The bank is known for its stable domestic segment at home and growing international segment focused on the U.S. market.
That growing U.S. presence is something that prospective investors should look carefully at. Following the Great Recession, TD acquired several smaller regional banks and stitched them together. The result was the bank’s current U.S. branch network, which now has more branches than its domestic segment in Canada.
That U.S. network also impressively stretches along the east coast from Maine to Florida, making it one of the larger banks in the U.S. market.
Earlier this year, TD stopped what was surely going to be the next phase of that impressive growth. TD first announced the US$13 billion acquisition of First Horizon back in 2022. Then earlier this year, TD walked away from the deal.
Prospective investors should note that TD walking away from the deal isn’t necessarily a bad thing. Interest rates have continued to surge, and TD is awash in cash rather than taking on more debt. And it’s not like the bank isn’t posting impressive gains.
Turning to results, TD isn’t due to report results on the fourth fiscal until later this month. Until then, we can recap what was a difficult, yet still impressive third quarter.
In that third quarter, TD reported an adjusted net income of billion, compared with billion in the same period last year. On a per-share basis, the bank earned adjusted diluted earnings of $1.99 per share, compared with $2.09 per share last year.
Investors: Here’s where TD really excels
The dip in results was attributed primarily to rising interest rates and higher provisions for credit losses. More importantly, investors should keep in mind that the dip in results stems largely from market fluctuations. And markets do recover.
In other words, TD remains a great long-term option for investors. And the fact that TD is down over 5% this year makes it a discounted great long-term option.
Another point to consider is TD’s dividend. The bank offers a juicy quarterly dividend with an impressive 4.74% yield. This means that prospective investors who purchase $30,000 of TD can expect to generate an income of over $1,400. And that’s without the expected annual bump to the dividend that TD has provided to investors without fail.
Finally, keep in mind that investors who aren’t ready to draw on that income can reinvest it until needed, allowing that income to grow further.
In other words, TD is a great buy-and-forget candidate for any well-diversified portfolio.
Down over 5% this year makes TD a great bank to consider
No stock is without some risk, and that includes TD Bank. Fortunately, TD is well-diversified with a growing moat in both the Canadian and U.S. markets. Additionally, the bank’s reliable and growing dividend make it a must-have for any portfolio.
In my opinion, TD should be a core holding as part of any well-diversified portfolio.
