Valued at a market cap of over $200 billion, Toronto-Dominion Bank (TSX:TD) is among the largest companies in Canada. In the last 10 years, TD stock has returned close to 250% to shareholders after adjusting for dividend reinvestments. If we extend the investment horizon to 20 years, its cumulative returns are much higher at 775%.
While TD Bank stock has delivered inflation-beating returns to long-term shareholders, let’s see if the blue-chip giant is still a good buy right now.
Source: Getty Images
Is TD Bank stock a good buy today?
TD Bank wrapped up fiscal 2025 with strong fourth-quarter results and laid out an ambitious transformation plan at its Investor Day that targets significant improvements in profitability and shareholder returns.
The bank reported quarterly earnings of $3.9 billion with earnings per share (EPS) of $2.18 and return on equity climbing 110 basis points year-over-year to reach double digits.
Management announced a dividend increase to $1.08 per share, moving to a semiannual review cycle, and confirmed plans to complete its current $8 billion share buyback by the end of the first quarter before launching another $6 billion to $7 billion program.
The transformation strategy centers on three pillars: deepening client relationships, simplifying operations, and executing with discipline. Management expects to expand EPS by 6% to 8% in fiscal 2026 and forecasts a return on equity (RoE) of 16% by the end of 2029, up from 13% this year.
A comprehensive cost-cutting program aims to remove $2 billion to $2.5 billion in structural expenses, driving the efficiency ratio down from 58% to the mid-50s range. The bank already completed approximately 75 AI use cases this year generating $170 million in value, with plans to add $200 million more next year through automation and process improvements.
TD’s Canadian Personal and Commercial Banking delivered record revenue and deposit volumes, driven by strong real estate secured lending originations and the best year of credit card acquisitions in nearly a decade.
The bank added 500 frontline commercial bankers in 2025 and plans continued expansion to capture deeper wallet share from existing clients.
Wealth Management posted record earnings driven by direct investing momentum, with trades per day up 37% year-over-year and record flows of $3.9 billion moving from direct investing to advisory services.
In the U.S., the bank made significant progress on anti-money laundering remediation, completing the majority of management actions this year while maintaining business momentum.
Core loans grew 2% year-over-year despite ongoing balance sheet restructuring that created $52 billion of capacity under the asset cap. The investment portfolio repositioning generated $500 million in net interest income in 2025 and should contribute an additional $550 million in 2026.
TD Securities delivered record quarterly revenue of $2.2 billion, showcasing the benefits of the TD Cowen integration, with revenue growing well above risk-weighted asset growth.
Is TD Bank stock undervalued?
Analysts tracking TD Bank stock forecast adjusted earnings to expand from $8.37 per share in fiscal 2025 to $11.83 per share in fiscal 2030. If TD stock trades at a trailing price-to-earnings multiple of 12.4 times, which is in line with its 10-year average, the TSX dividend stock should trade at $147 in December 2030, indicating an upside potential of 20% from current levels.
In this period, analysts forecast TD to raise its annual dividend from $4.20 per share to $4.90 per share. So, if we adjust for dividends, cumulative returns could be closer to 45% over the next five years.
