Not everyone has an appetite for significant risks, and with a possible economic recession looming on the horizon, many frugal investors are becoming more conservative when it comes to adding new stocks to their portfolios.
If you are looking for a secure long-term investment with the potential of higher-than-average returns, then Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock should be on your radar.
A dependable dividend stock
TD Bank is a multinational banking and financial services corporation headquartered in Toronto and is one of Canada’s Big Five banks. In terms of dividend rate, TD Bank is a Dividend Aristocrat, offering a solid 4% dividend yield.
TD is also known for its dependability and potential. TD Bank has consistently been rewarding its shareholders for the past 162 years, and with the bank showing steady growth in net income every year for nearly the past decade, it is unlikely that its dividend policy is going to change anytime soon.
Furthermore, the bank boasts the highest dividend-growth rate of the group, and with the lowest payout ratios in the sector, the trend is likely bound to continue and gain pace in the years ahead.
Investors would also be happy to learn that TD Bank was one of the few major companies to report earnings and revenue growth in the green during the 2008 financial crisis and remain the only one of the Big Five Canadian banks to maintain a top AAA credit rating during the period.
Aggressive acquisitions
Because of its better financial position after the Great Recession of 2008, the bank was able to pursue a more aggressive growth policy in the years afterward. To secure its foothold in the massive U.S. market, TD Bank acquired many banks along the U.S. East Coast, and today boasts 1,300 branches in the country from Maine to Florida.
Today, TD Bank registers as one of the largest banks in not just Canada but also the United States, and just last year it was designated as a global, systemically important bank by the Financial Stability Board. Thanks to its strategic acquisitions and influential corporate culture, the bank has managed to retain one of the most robust growth profiles of any major financial institution in North America.
TD boasts by far the largest United States presence of the Big Five banks in Canada. Not only is it large by Canada’s standards, but it even lands in the top 10 in asset size in the U.S. with $384 billion in assets, according to a recent report by Business Insider.
Summary
If you’re looking for a bank stock to invest in for 2020, TD Bank is a top choice for healthy returns and a strong international presence. Its aggressive acquisitions will hopefully pay off in the long run.
A century-and-a-half tradition of dependability, steady growth profile, and proven track record of maintaining momentum, even in the wake of global market crashes, make TD Bank a must-have stock for frugal investors looking to make good returns.
