Should You Buy TD Bank Stock While it’s Below $90?

Down 20% from all-time highs, TD Bank stock trades at a cheap multiple and should you deliver outsized gains in 2025 and beyond.

Toronto-Dominion Bank (TSX: TD) is among the largest banks in North America. With a market cap of $150 billion, TD Bank stock has returned 1,790% to shareholders in the last 30 years. However, if we adjust for dividend reinvestments, cumulative returns are significantly higher at 5,340%.

TD stock has comfortably beaten the broader markets and generated sizeable gains for long-term investors. However, it currently trades 21% below all-time highs due to a sluggish macro environment and regulatory issues. The ongoing drawdown has increased TD’s dividend yield to 4.9%, making the TSX bank stock attractive to income-seeking investors. So, let’s see if you should own the blue-chip TSX stock while it trades below $90.

ways to boost income

Source: Getty Images

TD offloads its investment in Charles Schwab

According to recent statements from bank executives, TD Bank Group has sold its entire 10.1% equity investment in Charles Schwab Corporation as part of a comprehensive strategic review aimed at repositioning its balance sheet and enhancing shareholder value.

“As part of our strategic review, we have been evaluating capital allocation and have made the decision to exit our Schwab investment,” said Raymond Chun, Group president and chief executive officer of TD Bank Group.

The sale of TD’s 184.7 million Schwab shares included a $1.5 billion share repurchase by Schwab, with the remainder sold through a registered offering managed by TD Securities and Goldman Sachs.

TD plans to use $8 billion of the proceeds to repurchase its own stock, which received regulatory approval. According to Chun, the remaining capital will be invested in TD’s businesses to “support our customers and clients, drive performance and accelerate organic growth. “

The divestiture significantly bolsters TD’s already strong capital position. Once the divesture is complete, TD’s common equity tier-one (CET1) ratio is expected to improve to 14.2%. A higher CET1 ratio provides flexibility for future investments while allowing the banking giant to maintain prudent capital levels.

This strategic move comes as TD navigates multiple challenges, including ongoing remediation of its U.S. anti-money laundering (AML) program. TD has appointed Guidepost Solutions as a monitor to strengthen its BSA/AML compliance program and is implementing new technologies, including machine learning tools, to enhance transaction monitoring capabilities.

The bank has also made significant progress on its U.S. balance sheet restructuring, reducing assets from $434 billion in September to approximately $402 billion in January. This includes the sale of a $9 billion corresponding lending portfolio expected to close in the second quarter and the repositioning of approximately $19 billion in bonds that should generate substantial net interest income benefits.

What’s next for the TSX bank stock?

During TD’s investor call, executives addressed growing concerns about potential tariff and trade risks clouding the economic outlook. “Should these risks materialize, a lot depends on their depth and duration and on the actions governments may take to support Canadians and Canadian businesses,” Chun noted.

Despite these headwinds, TD reported solid first-quarter performance with earnings of $3.6 billion, driven by volume growth in Canadian Personal and Commercial Banking and strong trading and fee income in its markets-driven businesses.

The bank continues to make progress against its medium-term financial targets while focusing on digital leadership, customer experience, and operational excellence.

Analysts tracking TD stock expect adjusted earnings per share to expand from $7.78 in fiscal 2025 to $8.57 in fiscal 2026. So, priced at 10 times forward earnings, the TSX stock trades at a discount of 6% to consensus price targets. After accounting for its dividend yield, cumulative returns may be closer to 10% over the next 12 months.

Charles Schwab is an advertising partner of Motley Fool Money. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Charles Schwab and Goldman Sachs Group. The Motley Fool has a disclosure policy.

More on Bank Stocks

Group of people in a line at an ATM waiting to make a cash withdrawal
Stocks for Beginners

Canadian Bank Stocks in Late 2026: Which Ones I’d Buy and Which I’d Skip

Canadian bank stocks offer different buying cases in late 2026. Compare Scotiabank, TD and Royal Bank on income, earnings and…

Read more »

customer uses bank ATM
Dividend Stocks

TFSA Withdrawal Rules Every Canadian Investor Should Know

Beware that re‑contributing withdrawn funds in the same calendar year can lead to a penalty from potential excess contribution.

Read more »

data analyze research
Stocks for Beginners

Maxing Out Your TFSA Isn’t the Final Step: Here’s What Is

A full TFSA still needs a plan: protect near-term spending, diversify long-term holdings, and understand when withdrawals restore room.

Read more »

senior couple looks at investing statements
Bank Stocks

BMO Says Canadians Need $1.7 Million to Retire: Your Number Could Be Very Different

BMO says Canadians need $1.7 million to retire, but your number may differ. See how CPP and OAS cut the…

Read more »

Concept of rent, search, purchase real estate, REIT
Stocks for Beginners

On a Variable Mortgage? Markets Are Now Betting on Hikes, Not Cuts

A rate hike remains possible, even after weak jobs data. Here's the household cost and the separate CIBC investment decision.

Read more »

woman checks off all the boxes
Stocks for Beginners

Using Your TFSA as a Retirement Account: Pros and Cons

The TFSA is an excellent tool to help you save and invest for your retirement nest egg, but there are…

Read more »

Paper Canadian currency of various denominations
Stocks for Beginners

Your Broker Withholds 15% on U.S. Dividends: Here’s The Tax Credit That Gets It Back

U.S. dividend withholding depends on your account, while BMO shows how a Canadian stock can offer U.S. exposure.

Read more »

Hand Protecting Senior Couple
Stocks for Beginners

How Much Do You Actually Need to Retire in Canada?

The same retirement lifestyle can require very different savings balances once pensions and withdrawal taxes enter the calculation.

Read more »