TD Bank (TSX: TD) is one of the Big Six Canadian banks. In this piece, I want to explore three things about TD stock that every smart investor knows in 2024.
TD Bank stock is a Canadian financial powerhouse
Royal Bank of Canada is the largest financial institution in Canada and the largest stock on the S&P/TSX Composite Index by market capitalization, boasting a market cap just above $185 billion at the time of this writing. Meanwhile, TD Bank is the second-largest financial institution in the country. It boasted a market cap of $145 billion at the time of this writing. Moreover, TD Bank possessed total assets of nearly $2 trillion at the end of fiscal 2023.
The bank unveiled its fourth-quarter (Q4) and full-year fiscal 2023 earnings on November 30, 2023. In Q4 2023, TD Bank reported adjusted net income of $3.50 billion or adjusted earnings per share (EPS) of $1.83 — down from $4.06 billion, or $2.18 per share, in Q4 fiscal 2022. For the full year, TD Bank achieved adjusted net income of $15.1 billion, or $7.99 in adjusted EPS. That was down from adjusted net income of $15.4 billion, or $8.36 per share, for the full year in fiscal 2022.
In Q4 fiscal 2023, the bank revealed that its Canadian Personal and Commercial Banking segment delivered net income of $1.67 billion, which was down 1% compared to the previous year. It attributed the decline to higher provisions for credit losses (PCL) and increased expenses. However, revenue was reported at $4.75 billion for the full year — up 7% compared to fiscal 2022.
This top Canadian bank is also a huge player in the United States
TD Bank boasts the largest retail footprint in the United States compared to its Big Six counterparts. Indeed, it is the 10th largest bank in the U.S. at the time of this writing. That extensive footprint may entice investors who are on the hunt for diversification in a blue-chip stock.
In its Q4 report, TD Bank unveiled the results of its U.S. Retail Bank. TD’s U.S. retail banking reported adjusted net income of $1.28 billion. That was down 19% compared to the previous year. Moreover, the TD Bank U.S. Retail Bank reported adjusted net income of $1.08 billion — down 15% in the year-over-year period.
Despite the year-over-year adjusted net income decline, there were several positives to glean that could boost TD stock going forward. Its total average loan balances increased 10% compared to Q4 2022 and were up 2% compared to Q3 2023. TD Bank has posted solid customer acquisition for its U.S. banking operations.
TD Bank is a Dividend Aristocrat
A Canadian Dividend Aristocrat is a stock that has delivered at least five consecutive years of dividend growth. TD Bank has achieved 13 straight years of dividend growth coming into January 2024. This top bank stock last paid out a quarterly dividend of $1.02 per share. That represents a strong 5% yield. Stocks that have long dividend-growth histories are typically bastions of dependability. When a Dividend Aristocrat is on sale, investors might want to take notice.
Shares of TD Bank have dropped 8.3% year over year as of close on Thursday, January 11, 2024. TD stock currently possesses a price-to-earnings ratio of 14. That puts this top bank stock in favourable value territory at the time of this writing. It is trading at a superior value compared to most of its industry peers in early 2024.
