Canadian banking stocks have long been reliable performers on the stock market through thick and thin. It makes sense that the Big Six Canadian banks are holdings in many institutional and self-directed investment portfolios.
Granted, the top banks have seen their share of ups and downs. However, Canada’s leading financial services companies have delivered on the promise of being investments Canadians can count on through all kinds of market environments. Almost halfway through 2025, Toronto-Dominion Bank (TSX:TD) is proving exactly that.
As of this writing, TD Bank stock trades for $90.72 per share. Up by 18.59% year to date, the $158.97 billion market-cap stock also offers $1.05 in dividends per share on a quarterly schedule, amounting to an annualized 4.63% dividend yield.
The Canadian stock market is still volatile, and TD Bank stock is gearing up to deliver its second-quarter report for fiscal 2025 later this month. As investors wait for May 22 to arrive, I think it might be the best time to invest in its shares.
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The rally in 2025
TD Bank appears to be rallying for several reasons on the stock market this year.
There’s plenty of optimism surrounding Canadian banking stocks, primarily due to easing interest rates and lower borrowing costs. While higher interest rates mean more interest income, it also means a greater chance of defaults. Canadian banks have plenty of provisions for loan losses set aside, but lower interest rates tend to work better. The lower the borrowing costs, the more banks can encourage lending activity.
TD Bank also suffered greatly last year amid the Anti-Money Laundering (AML) probes it faced in the United States. Fortunately for its investors, the bank has resolved the issue, and U.S. regulators have eased up.
In the January 2025-ending quarter, the bank reported a 10% sequential jump in revenue, and its earnings rose by 17%. The bank’s commercial and personal banking segments saw record revenue of $5.2 billion due to higher deposit and loan volumes. It’s also notable that the bank’s insurance and wealth management segments saw a 23% year-over-year growth.
Foolish takeaway
Against this backdrop, it makes sense why TD Bank stock might look like a good investment to consider for your self-directed portfolio right now. However, looking at how it might fit into a long-term investment strategy is also important. Here’s what I can say about that.
TD Bank is still addressing the U.S. AML issues. The bank has dedicated roughly half a million U.S. dollars to improve its governance and controls. The entire issue has weighed on the bank’s operations south of the border, but this spells great news for its retail segment in the U.S. in the long run.
The ongoing focus on restructuring its balance sheet in the U.S. can also lead to growth in its net interest income from the U.S. retail segment in the second half of fiscal 2025.
If you’re on the hunt for a reliable dividend stock to add to your self-directed portfolio right now, TD Bank might be an excellent holding for you to consider.
