Toronto-Dominion Bank Is Headed in the Right Direction

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) looks like a good stock to hold heading into 2017. The company’s recent earnings and future plans suggest success.

| More on:
The Motley Fool

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) investors have plenty to be excited about as we enter a Donald Trump presidency.

The company is slated to benefit from the U.S. president-elect’s policies; the top banking stock in Canada will face fewer regulations and lower corporate taxes. The expected boost that the U.S. economy will experience will benefit domestic growth in Canada as well as reduce any potential trading barriers that could come from the presidency.

Additionally, there are no glaring negative aspects of a Trump presidency that will hamper TD Bank. High revenue in the U.S. could benefit companies such as this one, and Toronto-Dominion Bank has the highest percentage of revenue based in the U.S. out of all Canada-based bank stocks.

The company’s commitment to its customers was highlighted by a recent move that will help some consumers decrease their overall spending. TD Bank launched an app called TD MySpend that examines the spending habits of its customers and suggests that they spend less in certain situations.

The app monitors how other customers spend their dollars during an outing, whether it be food, a night out, or buying furniture. About 750,000, or 20%, of TD Bank’s customers have downloaded the app with 30% saving money thanks to its suggestions. These people have saved between 4% and 8% in their monthly spending thanks to the app. MySpend only examines customers from one bank, but it will soon have technology that looks at how consumers from other banks spend their dough.

The company last reported its quarterly results on December 1, when it posted fiscal fourth-quarter earnings of $1.20 per share, rising 25% year over year. On an adjusted basis, TD Bank earned $1.22 per share, meeting the consensus estimate based on data from analysts polled by Thomson Reuters. Revenue came in at $8.75 billion, rising 9% year over year.

Retail earnings in the U.S. were 18% higher over its fourth quarter, while its Wholesale segment saw profits surge 21% compared to the year-ago quarter’s figures. Adding to this strong earnings showing were no credit losses in the company’s Wholesale business. The company’s oil business is also noteworthy as the energy industry will suffer some setbacks in 2016.

TD Bank’s involvement in oil has decreased as its “Oil and Gas Producers and Services” outstandings were reduced by $400 million, lowering the company’s oil business to less than 1% of its overall operations. Its performance in the U.S. improved and is expected to rise even more over the coming months. Earnings are expected to grow by a rate of 7-10%.

In its most recent period, the company raked in 87% of its net income from its Retail business in the U.S. and Canada. This segment could be more stable than its Wholesale business moving forward. Dividend investors could benefit greatly from this fact as TD Bank rewards investors quite generously.

The company shells out 55 cents per share on a quarterly basis to stakeholders. TD Bank’s annual dividend yield comes in at 3.52%, and this figure has more than doubled over the past decade.

Analysts are recommending you either buy or hold on to TD stock moving forward, and the company’s recent success suggests the same. Additionally, the impending Trump presidency will make for a strong 2017 for TD Bank. The company’s stability and its decision to reduce its involvement in oil could make for an even stronger yield moving forward.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Karl Utermohlen has no position in any stocks mentioned.

More on Bank Stocks

Meeting handshake
Bank Stocks

TD Bank (TSX:TD): Massive U.S. Deal Could Close Soon

The Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is about to close a $13.4 billion U.S. deal, sources say.

Read more »

retirees and finances
Bank Stocks

Why You Can’t Rely on the Common Sources of Retirement Income  

Future Canadian retirees can’t rely solely on the common sources of retirement income. However, there are ways to convert savings…

Read more »

edit Sale sign, value, discount
Bank Stocks

Buy Bargain Stocks and Make Tonnes of Money in This Market Downturn

Now is a good time to review your buy list to shop for bargain but quality TSX stocks over the…

Read more »

Bank Stocks

TFSA Investors: The Easiest Way to Turn $5,000 Into $50K

Stop making life so complicated. Buy this dividend stock and see your $5,000 turn into $50,000 in your TFSA.

Read more »

Money growing in soil , Business success concept.
Dividend Stocks

3 Top TSX Stocks to Generate a Stable Passive Income

In an uncertain market environment, here are three low volatility dividend stocks that will help you generate a stable passive…

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

Beginners: 2 Heavyweight Stocks to Buy and Outrun Inflation   

New and old investors alike can outrun inflation and achieve long-term financial goals by choosing heavyweight stocks as the anchors…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Why BMO Stock is the Best of the Big Six Banks

BMO stock (TSX:BMO)(NYSE:BMO) has a strong 200-year history of share and dividend growth, and right now it's absurdly cheap.

Read more »

hand using ATM
Bank Stocks

Want Enduring Value-for-Money? Pick 1 of 2 Big Bank Stocks

Two Canadian Big Bank stocks are not only trusted brands, but also offer enduring value-for-money to stock investors.

Read more »