Valued at a market cap of almost $200 billion, Toronto-Dominion Bank (TSX:TD) has returned 111% to shareholders over the past decade. If we adjust for dividend reinvestments, cumulative returns are closer to 221%.
Despite these inflation-beating returns, the blue-chip bank stock offers investors a tasty dividend yield of almost 4% in November 2025. While TD is part of the cyclical lending sector, it has raised its annual dividend per share from $2.16 in fiscal 2016 (ended in October) to $4.21 in fiscal 2025. Investors forecast the banking giant will increase its annual dividend per share to $4.55 per share in fiscal 2029.
Though TD remains a top investment for income-seekers, the large-cap bank is unlikely to replicate its historical returns over the upcoming decade.
Here’s another dividend-paying bank stock I’d buy over TD right now.
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Is EQB stock a better buy than TD Bank?
In fiscal Q3 2025 (ended in July), RQB reported a net income of $80.3 million, down 32% year over year. Valued at $3.2 billion by market cap, EQB is Canada’s Challenger Bank, which is currently navigating elevated credit provisions and margin pressures.
In fiscal Q3, it reported adjusted earnings per share of $2.07 and a return on equity (RoE) of 10.1%, both below historical levels. It expects to end fiscal 2025 with an RoE of 11.5%, below its target range of 15% to 17%.
Credit quality deteriorated further during the quarter as gross impaired loans increased 5% sequentially to $815 million, driven by weakness in personal lending. The single-family residential mortgage portfolio saw impaired loans jump 9.5% to $352 million, concentrated in approximately 50 larger loans in specific Toronto suburbs where home prices declined 25% to 30% from peak levels.
Total provisions reached $34 million or 28 basis points of loan assets, with $10 million in additional performing provisions. Management acknowledged that these economic headwinds may delay credit resolutions beyond the fourth quarter into 2026, though early-stage delinquencies have improved.
Moreover, the net interest margin compressed to 1.95%, down 25 basis points from elevated second-quarter levels, pressured by multiple factors.
Over half the sequential $17 million decline in net interest income stemmed from the prior quarter’s one-time benefit, while the rest was tied to commercial loan maturities.
Management maintained the full-year net interest margin target above 2% despite quarterly volatility. Additionally, EQB Bank focused on customer growth, adding 26,000 new accounts, and deposits reached a record $9.7 billion, up at the fastest sequential pace in three years.
Is this bank stock undervalued?
While EQB stock is down almost 25% from all-time highs, it has returned close to 265% to shareholders in the past decade.
Analysts tracking EQB stock forecast adjusted earnings to narrow from $11.03 per share in fiscal 2024 to $9.53 per share in 2025. However, EPS is projected to expand to $12.34 per share in fiscal 2027. If EQB stock trades at eight times forward earnings, which is reasonable, it could gain close to 20% over the next 12 months.
EQB has raised its annual dividend per share from $0.42 in 2016 to $2.08 in 2025, significantly enhancing the yield-at-cost. Its yearly dividend is forecast to increase to $2.75 per share in 2027.
