Canada’s big banks are among the best long-term options on the market. One of those big banks is TD Bank (TSX:TD), which is not without controversy. This has led many to question whether the big bank is an option to buy, sell, or hold in 2025.
Let’s try to answer that question.
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The case to buy
The case to buy Canada’s big banks is always a simple one. The big banks operate solid domestic operations that generate a reliable revenue stream. That’s certainly true for TD, which is the second-largest of the big banks.
The mature nature of the domestic market means that TD and its peers have looked to international markets for growth. In the case of TD, that growth has been focused on the U.S. market.
In the years following the Great Recession, TD aggressively expanded into the U.S. market by stitching together a series of well-executed acquisitions. That’s resulted in an impressive branch network that today stretches from Maine to Florida.
Most investors will be shocked to know that TD has more branches in the U.S. than it does in Canada.
This provides some diversification to the bank and allows it to continue to pay out a solid quarterly dividend. As of the time of writing, that dividend works out to an impressive 5.16% yield.
Factor in TD’s superior record of providing annual dividend increases, and you have a solid answer to whether you should buy, sell, or hold TD Bank.
The case to sell
As impressive as TD’s growth story in the U.S. market has been, it’s not without some controversy.
Specifically, the bank has come under pressure in recent months as U.S. regulators determined the bank didn’t do enough to prevent money laundering. This resulted in a $3 billion fine as well as an asset cap being placed on the bank.
That asset cap effectively puts a halt on TD’s growth plans in the U.S., at least for some time.
That decision has also led to TD’s stock price taking a dip of nearly 6% in the trailing 12 months and 12% in the past two years.
While there’s no doubt that TD will emerge from this current slump and resume growth, existing and prospective investors with shorter timelines may want to consider another option.
The case to hold
A final alternative for existing investors to consider would be to just hold TD stock for the moment. Despite being hit with an asset cap, TD still operates a sizable (and profitable) operation in Canada and the U.S.
The bank stock also boasts a juicy dividend that has seen its yield swell as the stock price sank. More importantly, the bad news has already hit TD’s stock price, so all that is left is the recovery.
In other words, holding TD stock now and collecting that yield may be a solid option for long-term investors. That makes the buy, sell, or hold question an easy answer for long-term patient investors.
TD Bank: Buy, sell or hold?
No stock is without risk, and even an otherwise defensive stock like TD holds plenty of risk. That being said, TD does offer a juicy yield and a growing dividend.
While growth may come slower than expected because of that asset cap, TD remains, in my opinion, a great long-term option to buy and hold.
