It’s shaping up to be a big decision year for investors wondering what to do with Toronto-Dominion Bank (TSX:TD). After years of steady growth and dependable dividends, TD stock faces some new challenges in 2025. Yet, at the same time, it’s showing signs of strength that are hard to ignore. If you are asking yourself whether to buy, sell, or hold TD stock right now, it’s a great time to step back and look at the full picture.
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What happened?
TD stock kicked off fiscal 2025 with earnings that were good, but not without a few hiccups. It reported adjusted net income of $3.6 billion, which was down slightly from last year. Adjusted earnings per share (EPS) landed at $2.02, which was just a hair above what analysts expected. Revenue came in strong at $15.03 billion, up 9% compared to last year. That kind of revenue growth is reassuring because it shows TD stock is still pulling in business even as economic conditions get a little tougher. However, the bank’s expenses also climbed, partly due to legal and regulatory costs, which weighed on overall profitability.
When you zoom into TD stock’s Canadian banking division, the story gets brighter. Canadian personal and commercial banking saw net income of $1.83 billion, a 3% jump from a year earlier. This segment has always been the backbone of TD’s business, and it’s good to see it still growing steadily. Wealth management and insurance also held up nicely, with net income of $680 million. Strong equity markets and higher insurance volumes helped here, giving TD stock a little extra boost. It’s safe to say the Canadian business is holding up its end of the bargain right now.
Still some concerns
The bigger concerns are tied to TD’s U.S. operations, which have stumbled. U.S. retail earnings fell a sharp 61% to $342 million. A good chunk of that drop comes from TD stock dealing with compliance issues, particularly related to anti-money laundering regulations. TD has set aside a significant amount of money, about US$500 million in 2025, to handle these remediation efforts. It also faces fines that could still rise, depending on how regulators proceed. This creates a bit of a cloud over TD’s otherwise solid operations. Until these issues are fully resolved, U.S. performance could remain bumpy.
That said, TD stock is still in a very strong financial position. The bank’s common equity tier-one (CET1) ratio, which measures its capital strength, stood at 13.1% at the end of the first quarter. After factoring in the sale of its remaining stake in Charles Schwab and share buybacks, TD’s pro forma CET1 ratio is expected to climb to 14.2%. That is an extremely healthy cushion, giving TD stock lots of flexibility to continue paying dividends, investing in growth, or even making acquisitions if the right opportunity comes along.
Value and cash
Speaking of dividends, TD stock remains a darling for income-focused investors. It currently offers a dividend yield of about 4.87%, which is among the highest of the Big Six Canadian banks. That payout has been rock solid for years, and management has a long track record of raising it. In a market that feels a little shaky, there is a lot of comfort in having reliable, tax-efficient income.
As for valuation, TD stock trades at a price-to-earnings (P/E) ratio of about 11.08. That’s fairly cheap both in historical terms and compared to its peers. Investors are getting a high-quality bank with strong Canadian operations, a great dividend, and some growth potential at a discount to its usual pricing. Of course, part of that discount reflects the uncertainty around the U.S. operations, so it’s not entirely a free lunch. But for long-term investors, it’s an attractive entry point.
Bottom line
In the end, whether you should buy, sell, or hold TD stock in 2025 really depends on your personal situation. If you already own TD stock, it makes sense to hold on. The dividend is solid, and Canadian earnings are growing. If you are thinking about buying, this pullback could be a good opportunity to add a high-quality name at a discounted price. Selling doesn’t seem necessary unless you’re uncomfortable with the risk around the U.S. division or you have better opportunities elsewhere.
