Undoubtedly, the broader markets were already on pretty weak footing going into October, with rates continuing to rise, all while the consumer continues to be pulling back on those discretionary expenditures. Only time will tell if we’re in for a recession over the coming months or if we’re already in one. Regardless, investors should continue to think long-term and not let scary events or horrific black swans dictate whether one buys or sells shares of a given company.
At the end of the day, long-term investors need the proper temperament to do well. Otherwise, they could stand in the way of their investment portfolio and a rich retirement. In this piece, we’ll focus in on one blue-chip dividend play that I think could be one of the best value options to end the year. Additionally, I think shares could have a leg up over the broader TSX Index over the next 10 years.
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TD Bank: A dirt-cheap bank stock to consider
Indeed, TD Bank (TSX:TD) is a well-run Canadian bank that’s incredibly well capitalized and ready for a recession to land in Canada. Whether it’s a bumpy landing or a relatively soft one, TD has more than enough capital to take a hit to the chin. For now, investors seem more than willing to pass on the stock, as prospects grow dim in the face of an economic slowdown.
The banks tend to be underwhelming performers in the face of economic headwinds. Loan growth can stall, and provisions could spook investors to the sidelines for quite some time. While TD Bank isn’t immune from the woes facing the broader basket of Canadian bank stocks (the Big Six banks as they’re often referred to), I think that the risk/reward scenario looks to be the most attractive it’s been in recent memory, perhaps in many years.
At just shy of $80 per share, TD stock is right back to where it was at the start of 2021. A few more percentage points lower, and the stock could find itself in the consolidation range it spent a few years before the 2020 stock market crash took hold. Indeed, it’s never encouraging to have a stock fall to multi-year lows. That said, I think the $77-78 level holds some pretty strong support for the stock.
Whether shares can ricochet off the level remains another question entirely. Fundamentally speaking, TD looks solid but rather untimely, given a lack of prominent catalysts to move the needle on the shares.
In any case, Canadian investors can get paid a great deal while they wait. The stock yields 4.81% at the time of writing. Should the stock fall back to its $77-78 range, the yield could hit the 5% mark. Indeed, that’s close to the highest the yield has been outside of crisis-level conditions.
The bottom line
Though rates on various risk-free assets already exceed 5%, I still think TD stock remains intriguing from a longer-term perspective. From a total returns front (capital gains and dividends), I think it’ll be tough for risk-free assets to stack up.
