Canadian bank stocks have been off to an impressive start despite all the fears that trade tension-induced panic due to tariffs might bring the Canadian economy into recession. Right now, there’s a pause on tariffs, and the recession feared to be inevitable has yet to come around.
As we move closer to the halfway mark of 2025, the S&P/TSX Composite Index only seems to be climbing to new all-time highs. Positive movement in the Canadian benchmark index reflects a broader picture of the Canadian stock market and, in turn, the economic situation.
With the index reaching newer heights, it seems that the so-called top Canadian bank stocks have become quite the leaders, driving the market upward. In light of this development, we will take a closer look at one of the biggest bank stocks to determine whether it might be a good investment at current levels.
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TD Bank
Toronto-Dominion Bank (TSX:TD) has been quite a comeback story over the last few years. The reason I want to focus on TD Bank stock is its remarkable performance despite all the trouble it faced with American regulators. The $164 billion market-cap stock faced regulatory action in the US due to the bank’s money-laundering fiasco last year.
The restrictions and penalties imposed on it had a negative impact on the bank’s performance in the stock market, but it is making remediations. The financial institution has new managers aboard, and it has revisited its growth plan. These factors are major contributors to the stock’s performance in the last few weeks.
The bank has paid all the fines it was supposed to, and it will settle with the asset cap on US-based assets. The bank is also selling off some of its non-core assets to improve its liquidity position. Greater liquidity can mean more spending money for the bank to make big moves.
However, it remains to be seen what the new CEO of the bank will consider doing with the newly refreshed war chest. The bank is playing the long game in the US market, but its US-market-based growth will face significant restrictions for a few years to come.
Foolish takeaway
TD Bank’s operations in the US market might be slower now, but that doesn’t mean there is no growth potential in the domestic side of things. The extra money that the bank amasses from the sale of non-core assets can be valuable for any planned acquisitions or other growth-focused decisions the bank makes.
As of this writing, TD Bank stock trades for $95.22 per share and distributes $1.05 per dividend per share each quarter to its investors, translating to an annualized 4.4% dividend yield. Suppose you’re looking for a reliable dividend stock that is fundamentally strong and supports regular dividends. In that case, TD Bank might be an excellent pick to consider for your self-directed investment portfolio.
