3 Reasons to Buy TD Bank Stock Like There’s No Tomorrow

Looking for a great bank stock to add to your portfolio? Here are three reasons why TD (TSX:TD) may be the perfect stock to buy right now.

| More on:

Image source: Getty Images

Canada’s big banks are some of the best long-term investments for any portfolio. There’s a good reason for that view. The banks offer a reliable revenue stream, stable growth, and a juicy income. And right now, TD (TSX:TD) is emerging as the one bank stock investors should consider.

Here’s a trio of reasons why TD Bank stock may be the one big bank stock your portfolio needs right now.

Reason #1: TD is a well-diversified growing option

TD is the second largest of Canada’s big banks. What few investors may realize, however, is that the bank has a larger branch network outside of Canada. Specifically, TD operates a massive and growing network in the U.S.

That U.S. network is a great example of TD’s focus on growth. Following the Great Recession, TD acquired several smaller regional banks, stitching them together under a single banner. Today, that network boasts over 1,100 locations stretching from Maine to Florida.

That diversified network provides an alternative revenue stream for the company during earnings season. In the most recent quarterly update, TD reported an adjusted net income of 2,886 million, of which $1,280 million came from that U.S. presence.

That fact alone makes TD Bank stock an intriguing option for investors looking for a long-term growth pick.

Reason #2: A juicy income comes standard

One of the most compelling reasons why investors continue to flock to TD Bank is for the juicy dividend that it offers. As of the time of writing, TD offers an appetizing quarterly dividend that pays out a yield of 5.13%

For prospective investors with $30,000 to allocate towards TD stock, that dividend works out to an income of just over $1,530. Additionally, investors who aren’t ready to draw on that income just yet can reinvest it until needed. This allows any eventual income to grow until needed thanks to reinvestments.

Speaking of growth, investors can also take solace in the fact that TD has an established precedent of paying out dividends going back nearly two centuries. Even better, the bank has also provided investors with annual bumps to that dividend going back over a decade.

Reason #3: Now is the time to buy TD Bank

Apart from that juicy dividend, another great reason to buy TD Bank stock right now comes down to the current stock price. As of the time of writing, TD is trading down 14% over the trailing 12 months.

That decline has pushed the stock price down to just over $79, which is close to the bank’s 52-week low. It also means that the bank trades at an attractive price-to-earnings ratio of just 14.19.

Much of that decline can be attributed to the interest rate hikes we’ve seen over the past year, which forced all banks to increase loss provisions.

In other words, long-term investors contemplating TD as part of their portfolio can pick up the stock at a great discount right now.

Final thoughts

No stock is without some risk, and that includes TD Bank stock. Fortunately, TD’s growing exposure to the U.S. market, stable domestic arm, and juicy dividend make it a must-have for any well-diversified portfolio.

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 Demetris Afxentiou has positions in Toronto-Dominion Bank. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Bank Stocks

Stocks for Beginners

Value Investors: Are You Buying and Holding Forever? Think Again

Value stocks are great, but if you don't have a goal in mind that stock can quickly turn from value…

Read more »

question marks written reminders tickets
Bank Stocks

Is Bank of America Stock a Good Buy Right Now?

Down 40% from all-time highs, Bank of America stock is very cheap and may outpace the broader markets this year.

Read more »

Bad apple with good apples
Bank Stocks

A U.S. Bank Stock Just Tanked: Is Canada Next?

A U.S. bank stock just plunged from downgrades, so how are Canadian bank stocks faring, and could they be next…

Read more »

Man holding magnifying glass over a document
Bank Stocks

Bank Stocks Are a Deep Value Today: 2 Top Choices to Watch

TD Bank (TSX:TD) and another stock are intriguing bank stocks with deep value propositions for long-term investors.

Read more »

protect, safe, trust
Dividend Stocks

Want Super-Safe Dividend Income in 2024? Invest in the Following 2 Ultra-High-Yield Stocks

High-return investments are usually high risk but two generous dividend payers are exceptions if you want super-safe dividend income in…

Read more »

Man data analyze
Bank Stocks

Is it Now Too Late to Buy Bank of Montreal Stock?

Bank of Montreal is up 20% from the 2023 low. Are more gains on the way?

Read more »

woman analyze data
Bank Stocks

RRSP Investors: Is Royal Bank of Canada Stock a Buy Now?

Royal Bank is up 20% from the 2023 low. Are more gains on the way?

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Bank Stocks

Where Will Royal Bank Stock Be in 10 Years?

Here are some key factors that make Royal Bank a great stock to buy now and hold for the next…

Read more »