Why This Canadian Bank Stock Could Be the Best Buy in 2025

The Big Six banks are some of the safest investments you can make, and this one looks like the best for growth.

Key Points
  • The Big Six Canadian banks offer stable and increasing dividends and strong capital resilience, making them attractive during market uncertainty.
  • TD Bank stands out with a solid earnings rebound, undervaluation, and a robust 4% dividend, promising growth and stability.
  • Investing in TD now can benefit from long-term growth and consistent dividends, rewarding patient investors.

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.

open vault at bank

Source: Getty Images

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!

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYTOTAL INVESTMENT
TD$106.2565$4.20$273Quarterly$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.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Bank Stocks

Piggy bank in autumn leaves
Bank Stocks

Rates Are Rising Again, So Are GICs and High-Interest Savings ETFs Even Worth It?

The Bank of Canada hiked rates to 2.50%. See what a GIC or the Purpose savings ETF earns on $10,000…

Read more »

Group of people in a line at an ATM waiting to make a cash withdrawal
Stocks for Beginners

TD vs. Royal Bank: Which Dividend Stock Would I Buy With $10,000?

TD offers slightly more current income, while Royal Bank's broader earnings mix earns my preference for a patient holding.

Read more »

Hand Protecting Senior Couple
Stocks for Beginners

Royal Bank Stock: What I’d Pay for a Dividend I Plan to Hold for Years

Royal Bank's dividend has room behind it, but I'd want a better starting yield before making a large income purchase.

Read more »

dividends can compound over time
Stocks for Beginners

If Rates Go Up, Are Canadian Bank Stocks Buys or Traps?

Banks are high‑quality businesses, but after a strong run-up over the last few years, investors should re-balance and maintain portfolio…

Read more »

A series of red ladders lead to successively higher levels
Bank Stocks

Is Your GIC Still Worth It? How the Rate Hike Might Change the Math for Savers

See how inflation, taxes, and where you shop determine whether your GIC is still worth owning in October 2026.

Read more »

Happy golf player walks the course
Bank Stocks

The Best Canadian Dividend Stocks if You Want Passive Income

Beyond their quarterly dividend payouts, these two top Canadian dividend stocks offer solid earnings growth and promising long-term opportunities for…

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Stocks for Beginners

Rate Hike Risk Is Back: Where I’d Park My TFSA Cash Right Now

Prioritize quality businesses with strong balance sheets and dividend-growth records, and accumulate shares gradually, especially on pullbacks.

Read more »

Senior uses a laptop computer
Stocks for Beginners

What Is an RRIF, and When Do You Need One?

An RRIF can keep your investments working, but its required withdrawals need a cash plan that goes beyond dividend income.

Read more »