When you’re thinking about building a solid investment portfolio in Canada, our big banks often come to mind as reliable cornerstones. Among them, Toronto-Dominion Bank (TSX:TD) and Royal Bank of Canada (TSX:RY) are two of the biggest and most well-known players. If you had $15,000 Canadian dollars to invest, deciding how to split that money between these two banking giants is something worth thinking about. Yet both offer slightly different recent experiences.
Source: Getty Images
Recent earnings
Let’s start with the Royal Bank of Canada, which is the biggest bank in Canada when you look at the total value of its shares. It recently reported a strong first quarter for fiscal year 2025. The net income actually rose to $3.6 billion, and that was helped by a really impressive 48% jump in wealth management income and a solid 24% increase in the revenue from the capital markets division. The adjusted earnings per share also came in strong at $3.62, which was better than what analysts were expecting. It looks like RBC is doing pretty well across the board.
On the other hand, Toronto-Dominion Bank faced a few bumps in the road during the same period. The net income actually went down a bit to $2.8 billion. This was mainly due to a significant 61% drop in earnings from the U.S. retail business, and that was tied to some compliance issues it’s been dealing with. Despite this challenge, TD still managed to beat analyst estimates with adjusted earnings per share of $2.02. So, while it’s had some headwinds, it’s still performing reasonably well overall.
A balanced approach
Both RBC and TD have shown the ability to weather different economic conditions. Yet recent situations suggest that maybe a slightly balanced approach to investing might be wise. For example, you could consider allocating a bit more, say $8,000, to Royal Bank of Canada right now, given the strong recent performance and diverse ways of making money. Then, you could allocate the remaining $7,000 Canadian dollars to Toronto-Dominion Bank. This way, you’d have a solid base with RBC, while still having a significant investment in TD, which has the potential to see gains as they work through their current issues.
Investing in these banks also comes with the perk of dividends. Based on the latest reports, RBC has a dividend yield of around 3.6%, and TD is offering a yield of about 4.9%. These regular payouts can provide a nice steady stream of income, which adds to the overall return you might see on your investment.
Of course, it’s always important to keep an eye on how things are developing, especially how TD is progressing in fixing compliance issues and how RBC is managing to maintain its growth. Regularly checking financial reports and staying up-to-date on market conditions will help you make sure your investment still lines up with your financial goals down the road.
Bottom line
In conclusion, if you had $15,000 to invest in Canada’s banking sector, splitting it between Royal Bank of Canada and Toronto-Dominion Bank offers a balanced way to participate in this important part of our economy. By combining the current strengths of RBC with the potential for TD to bounce back, investors can position themselves for potential growth. All while also enjoying the benefits of dividend income. It’s like having a foot in two of Canada’s biggest financial boats.
