In 2024, dividend stocks remain in focus for a wide range of investors. Those taking a passive approach to investing or looking to create an income stream in retirement may already hold or are considering companies like Canadian banking giant Toronto-Dominion Bank (TSX:TD). There are many reasons to hold this stock over the long term, including the company’s long-term performance and dividend-growth profile.
I think TD Bank has what it takes to continue to see greater price appreciation and challenge for the top spot on the TSX over time. Here’s why I remain bullish on this Canadian banking giant right now.
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TD Bank is among the best financial stocks in the world
A global player in the financials sector, TD Bank is best known as a Canada-focused institution. That said, the company’s footprint across the East Coast of the U.S. is impressive, with U.S. retail banking being among the key growth drivers of this company in recent years. TD has continued to expand its footprint in the U.S. market, which now has a bigger impact on the company’s balance sheet than its Canadian operations (from a retail standpoint).
This sort of geographic diversification is important to emphasize. That said, the company remains a giant in Canadian personal and commercial banking, with strong wholesale banking and wealth management/insurance arms investors can’t ignore.
As of mid-2023, TD held approximately $1.9 trillion in assets, making this among the leading global banks. The company serves more than 16 million active online and mobile customers.
Strong financials point to continued growth
Another reason I continue to focus on TD Bank relative to its Canadian peers is the company’s balance sheet strength and continued growth. In the company’s most recent earnings report, TD brought in diluted earnings per share of $1.55, nearly doubling from the same quarter the year prior. Net income also grew nicely, easily covering the company’s current dividend distribution.
With a yield of more than 5%, TD stock provides an attractive option as a bond proxy, even given current interest rates. If interest rates decline, that should be yet another catalyst for the company, as yield curves normalize, leading to higher net interest margins over time.
Bottom line
Overall, Toronto-Dominion Bank is one of the largest Canadian banks you must not hesitate to add to your investment portfolio. The bank’s focus on long-term growth and earnings stability makes this a dividend stock with real staying power. For those thinking long-term, there are few better dividend options in the market right now, in my view.
