Toronto-Dominion Bank (TSX:TD) is one of Canada’s top banks and the sixth largest U.S. North American bank by assets. Last night, TD Bank reported its fourth quarter and year-end results. The results came in ahead of expectations in a quarter that highlighted TD’s strengths.
TD stock is rallying more than 2% today at the time of writing – a response to this positive earnings report. But what should investors do with it as we head into 2026?
TD stock: A lesson in consistency
Let’s start off by reviewing the performance of TD’s stock over the last many years. As you can see from the graph below, the stock has a very favourable performance – up 57% so far in 2025. Looking to its longer-term performance, we see more of the same strength and consistency – TD stock is up 125% in the last 10 years and 290% in the last 20 years.
Note the steady and consistent climb upwards. This is no coincidence. It is, in fact, taking its cues from TD Bank’s strong and consistent results.
So, the question now is, what’s in store for 2026? Can TD Bank’s stock continue this strong performance in the face of economic uncertainty, increased credit risk, and increased competition?
TD Bank – Fourth quarter review
In the fourth quarter, TD Bank delivered a 27% increase in its adjusted earnings per share (EPS) to $2.18. This was driven by strong performance in its U.S. retail business, record wealth management earnings, and record wholesale banking results.
In TD’s U.S. retail segment, the bank is seeing sustained business momentum, with net income increasing 31% to $719 million. Net interest income increased 7%, and the bank’s net interest margin came in at 3.3%, up six basis points versus last quarter.
TD’s wealth management business was another pocket of strength, with record earnings and assets. Assets under management increased 13%. Higher fee-based revenue, deposit volumes, and transaction revenue boosted this segment’s net income, which increased 24% to $557 million.
Finally, TD’s wholesale banking segment also posted record revenue and net income. Revenue increased 24% to $2.2 billion and net income increased 77% to $529 million. These results were driven by higher trading-related revenue, underwriting fees, advisory fees, and equity commissions.
What’s in store for 2026?
The momentum that TD Bank is currently experiencing is evident. And according to TD’s CEO, Raymond Chun, “We are carrying that momentum into 2026”. The bank expects to achieve its 6% to 8% EPS growth and 13% return on equity (ROE) targets for fiscal 2026, with potential upside due to continued strong momentum at TD.
While these targets are being pursued, TD Bank will continue implementing its remediation actions as well as its cost reduction program. The remediation plan is addressing the vulnerabilities of the bank that made it susceptible to money-laundering practices. The full cost reduction program will realize annual cost savings of approximately $750 million pre-tax.
The bottom line
TD Bank stock has been a solid performer over the long term. I don’t expect this to change, as the bank is a beacon of strength, with a well-capitalized balance sheet and a strong, leading position.
The current yield on TD stock is 3.5%.
