After three years of declines, Toronto-Dominion Bank (TSX:TD) has started 2025 with strong momentum, surging 11.2% year to date to $85.30 per share, outpacing the TSX Composite Index’s 3.7% gain. With a market cap of $149.2 billion, TD remains Canada’s second-largest bank, and its strong rebound suggests renewed investor confidence.
But where will TD stock be in three years? Will this momentum continue, or are there risks that could slow its rally? In this article, let’s take a closer look at TD Bank’s financial strength, growth strategy, and macroeconomic factors to find out whether its stock could continue to deliver strong returns in the coming years.
What’s helping TD stock recover?
While TD stock is outperforming the broader market and most other large Canadian bank stocks in 2025, it’s important to note that it underperformed most of its peers last year. This pessimism was mainly driven by concerns about its U.S. anti-money laundering challenges, which led to regulatory scrutiny and financial penalties. But now that TD has reached a resolution on this issue, investors seem to be starting to see the bank in a new light.
Besides that, another big driver behind TD stock’s recent recovery could be its strong performance in its core Canadian personal and commercial banking segment. In the quarter ended October 2024, this division’s revenue rose 7% YoY (year over year) to a record of $5.1 billion. Meanwhile, TD’s wealth management and insurance business also saw a 33% YoY jump in revenue last quarter due to rising insurance premiums and asset growth.
With solid loan and deposit growth, TD is continuing to prove that its core business remains healthy despite macroeconomic challenges and regulatory setbacks.
The long-term growth strategy
In recent years, TD has increased its attention on prioritizing two major areas: expanding its digital banking platform and strengthening its U.S. operations. The bank is investing heavily in its tech infrastructure to improve customer experience, making its banking services easy to use and more efficient.
In the U.S., TD’s retail banking unit posted a 32% YoY decline in its October quarter net profit due to higher provisions for credit losses. But a clear sign of the bank’s continued focus on this business is its recent decision to extend the Nordstrom credit card program through 2032. Moreover, its long-term U.S. expansion strategy with improving risk controls could result in meaningful growth over the next few years.
Where TD stock will be in three years
With TD stock now trading 16% above its 52-week low and offering an attractive 4.9% dividend yield, it’s easy to see why it’s catching investors’ attention in 2025. While short-term challenges remain, including ongoing regulatory adjustments and U.S. banking headwinds, the bank’s strong balance sheet and focus on long-term growth make it a solid pick for income-focused investors.
If the bank continues executing its long-term growth strategy, improves efficiency, and benefits from a stronger economic environment, TD stock could continue climbing in the coming years, making it an attractive stock for investors looking beyond short-term market swings.
