While the broader market has had a rocky start to 2025, Toronto-Dominion Bank (TSX:TD) is showing strength. Even as escalating geopolitical and trade tensions have driven the TSX Composite Index down by 3.7% so far this year, TD Bank stock currently trades with an 8% year-to-date gain at $81.05 per share.
That’s not bad at all, especially for a big bank still navigating some headwinds from its U.S. operations. And when you factor in its 5.2% annualized dividend yield and a massive $140.8 billion market cap, it becomes clear why it remains an attractive option for long-term Foolish investors.
Before I talk more about why TD Bank stock could be a great buy for investors looking to grow wealth within a Tax-Free Savings Account (TFSA), let’s take a quick look at factors supporting its recent strength.
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What’s driving the stock higher?
One of the biggest reasons TD stock might be getting attention again this year is the strong signal it’s sending to the market that it’s back in control of its narrative. The bank’s decision to fully exit its investment in Charles Schwab earlier this year brought in $21 billion in proceeds. Not only did this simplify its operations, but it also unlocked significant capital. Notably, TD expects to recognize an $8.6 billion gain from the transaction, which is likely to boost its flexibility for share buybacks and new growth investments.
At the same time, the bank is actively working through its U.S. balance sheet restructuring, which involves shifting away from lower-yielding assets to improve long-term returns. While this came with a $927 million restructuring cost in the latest quarter, it’s a strategic move that should improve its profitability — especially as the interest rate environment continues to ease.
Solid trends in key business segments
Now, despite the noise, TD is still delivering where it matters. In the first quarter (ended in January) of its fiscal year 2025, the bank posted record adjusted revenue of $15 billion and adjusted net profit of $3.62 billion. While these figures were relatively flat from a year ago, they represented a meaningful improvement from the previous quarter.
TD’s Canadian retail banking division was a clear bright spot as it generated $5.15 billion in revenue, reflecting a 5% YoY (year-over-year) jump due to strong growth in deposits and loans. Similarly, its wealth and insurance segment also performed well last quarter, with a 23% YoY rise in net income driven by rising assets under management and growing insurance premiums.
Why TD Bank stock could shine inside your TFSA
With its capital ratios strong and its dividend yield above 5%, TD Bank stock is giving investors plenty of reasons to stick around. But what really makes it stand out is the bank’s ongoing investment in long-term growth. It’s ramping up technology, expanding its wealth platform, and taking measurable steps to resolve past issues in its U.S. operations — including compliance upgrades and internal controls.
In a market that’s still unpredictable, TD’s mix of size, income, and forward-looking strategy makes it a rare blend of safety and upside. And with a price tag under $90, it looks even more attractive for long-term investors building out a growth-focused TFSA.
