Canadian bank executives have been warning the markets for some time that economic headwinds are going to put pressure on earnings. Investors got a glimpse of this in the fourth quarter of 2014 when a number of Canada’s big financial institutions reported less-than-stellar earnings.

Stocks in the segment had been in a downward trend, dropping by as much as 15% from the 2014 highs, but the sector has rallied in the past few weeks and investors are trying to decide if they should be buying shares of Canadian banks before the next round of earnings come out.

Let’s take a look at Toronto-Dominion Bank (TSX:TD)(NYSE:TD) to see if this is a good time to add the stock to your dividend portfolio.

Earnings outlook

After the disappointing Q4 2014 results, TD came back with a strong showing for Q1 2015, which wrapped up at the end of January. The company delivered earnings of $2.1 billion for the quarter, which was a year-over-year gain of 5%.

The Canadian operations remain TD’s largest profit centre. TD’s retail operations in this country consistently win customer service accolades and the sales operation is a well-oiled machine. Every customer-facing employee is on the lookout for opportunities to help clients manage their day-to-day banking needs. Part of this process includes offering new revenue-generating products.

The strategy is certainly effective. TD’s Canadian retail group contributed $1.4 billion in net income in the first quarter, driven by strong growth in both loans and deposits. The company’s insurance division also did well.

While the Canadian division continues to roll along, the U.S. operations should be the focus for new investors who are evaluating the stock.

TD received US$536 million from the U.S. operations in Q1, representing a 15% increase over the same period in 2014. The company has spent roughly $17 billion in the past decade to acquire and build more than 1,300 branches running from Maine all the way down to Florida. The bank says it now has the scale it needs and is focused on driving organic growth in the U.S. unit.

Oil rout risks

TD’s Chief Risk Officer Mark Chauvin told analysts on the Q1 conference call that TD doesn’t anticipate any significant negative effects from an extended slump in the oil market. The company has less than 2% of its total consumer credit exposure tied to the most affected regions.

Should you buy?

Toronto-Dominion Bank is a dividend machine. The company just increased its payout by 9%, and investors should take this a strong signal from management that the earnings outlook isn’t as dire as some of the pundits might have expected.

TD is trading at a reasonable 11.6 times forward earnings and 1.8 times book value.

As a long-term buy-and-hold pick, TD is a solid choice and dividend investors should continue to see consistent distribution growth.

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Fool contributor Andrew Walker has no position in any stocks mentioned.