Canadians continue to struggle in this market. Inflation and interest rates are still quite high, yet the market keeps hitting all-time highs. It’s a confusing scenario, with investors likely not knowing whether to put more cash into the market or keep it out. Yet if you’re considering the Big Six banks, let me tell you right now: keep the cash in, and keep contributing.
Why the Big Six?
There’s something many Canadians might not realize, and that’s just how huge our banks are. In the United States and other locations around the world, there’s a lot more competition among banks. Instead, here in Canada, we have six large banks that are included with some of the largest banks in the world.
And yet, we’re used to it, so we might skip out on investing in these banks, and that’s where mistakes are made. We saw this during 2024, when the Big Six banks came through 2024’s higher interest rate environment with steady profitability. By 2025, provisions for credit losses started coming down, loan growth went up, and capital markets picked up as well.
The Big Six banks’ dividends are hard to beat — not just because of the cash coming in, but also because of the increases and stability during tough times. Yet it’s not only the dividends; the capital strength is a major advantage. Common equity tier-one (CET1) ratios remain well above regulatory minimums, giving banks a comfortable cushion to keep weathering economic uncertainty. With global diversification, attractive valuations, and seriously long histories of growth, these banks are simply too good to pass up.
Why TD stock works
So, which of the Big Six banks should investors consider? Now might be the best time in years to get in on Toronto-Dominion Bank (TSX:TD). The bank stock has gone through quite the turnaround after seeing losses and an anti-money laundering scandal that brought share prices down and increased costs. While it’s still executing its U.S. business and leadership transitions, this could mean there’s growth once things mellow out.
Meanwhile, the bank stock is proving to stay the course during times of trouble. The dividend stock reported third-quarter earnings that rose sharply, swinging from last year’s loss with earnings of $3.3 billion. Adjusted earnings rose 6% to $3.9 billion, with adjusted earnings per share (EPS) at $2.20 from $2.05. TD stock also saw record Canadian banking income, with a strong 9.3% revenue jump.
As with the other banks, it remains attractive, trading at nine times earnings and a forward 12 times earnings. This shows the bank is undervalued compared to its peers, offering a margin of safety with a higher dividend. A dividend that sits at 4%, with a 36% payout ratio for even more growth in dividends and expansion.
Bottom line
Investors will need to keep watching the company’s management in the U.S., but in the meantime, they can get in on growth and dividends that last. TD stock continues to be well prepared for the future of growth and investment, and investors will be rewarded for waiting. Right now, a $7,000 investment could bring in $273 each year!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| TD | $106.25 | 65 | $4.20 | $273 | Quarterly | $6,906 |
While all Canadian banks look like great investments, TD stock could be one of the best. With an attractive dividend, major value, and clear growth drivers, it’s perfect for investors looking for stability and growth.
