The financials sector is one many investors have looked to in the most recent quarters following the Trump election victory as one which has been expected to outperform. Most financials have, in fact, outperformed their peers in other sectors, suggesting that a number of high-flying names in the financials sector may now be entering “overvalued” territory.
I’m going to talk about one financials company trading on the TSX which I believe to continue to carry significant long-term value for investors with a long time horizon, despite significant capital appreciation in recent years: Toronto-Dominion Bank (TSX: TD)(NYSE: TD).
Strong, diversified growth profile
TD is Canada’s second-largest bank, and one which has grown its exposure outside Canada to significant levels. With more than 30% of the company’s business originating in the U.S. market, TD Bank has diversified nicely toward a market which is expected to outgrow its peers over the medium to long term. The bank is well positioned to take advantage of opportunities as they arise, continuing to bolster its global reach and improve an already strong balance sheet. With strong exposure to North American markets, domestic growth within Canada as well as improved growth in the U.S. market should serve TD well from both a diversification and growth standpoint.
Impressive, growing dividend
The company’s dividend has continued to grow in double digits (on average) over the past 20 years, making this company one of the most proficient Canadian companies at growing its dividend over time. The company has maintained a relatively low dividend-payout ratio for some time now, suggesting the opportunity for additional distribution growth in the future remains likely.
The company’s yield of 3.6% has this bank near the higher end of the yield spectrum for financials institutions, and with management’s willingness to continue to raise the bank’s dividend each and every year, TD has the ability to be a winner for long-term investors.
For Canadian retirees, or those looking for a great income name or diversification within the financials sector, taking a good, hard look at TD may be the way to go.
Bottom line
TD’s positioning in its key markets, its focus on growing responsibly and in a diversified manner, and the focus on dividend growth straight from TD’s management team makes this bank a dream investment opportunity for long-term investors looking for a mix of yield and capital appreciation.
Stay Foolish, my friends.
