I don’t usually buy a stock thinking about whether my kids might own it one day, but Toronto-Dominion Bank (TSX: TD) seems different. I already own TD, and when I look decades ahead, I can imagine keeping these shares in the family rather than eventually looking for an exit.

The bank serves millions of clients, has roughly $2.1 trillion in assets, and operates across Canadian and U.S. banking, wealth management, and capital markets. That scale gives it several ways to keep growing through different economic cycles.

While TD stock has already climbed about 61% over the last year, the continued strength in its earnings across several major businesses makes me think there could still be plenty of long-term upside ahead.

Let me explain why TD is a Canadian bank stock I’m comfortable owning for decades and could eventually pass onto my kids.

Why I’m holding TD for the long term

At the time of writing, TD stock traded at $166.18 per share with a market cap of $272 billion. At that current price, it also offered a 2.7% annualized dividend yield.

The stock’s impressive performance in recent years could mainly be attributed to the improving earnings growth across several important parts of its business. In the third quarter of fiscal year 2026 (ended in July), TD’s net income jumped about 38% year-over-year (YoY) to $4.6 billion.

That strength was broad-based as its Canadian personal and commercial banking division posted record earnings of about $2.1 billion, up 7% YoY, as revenue rose 5%. Higher loan and deposit volumes, along with stronger margins, supported that growth.

Similarly, TD’s U.S. banking business also showed better momentum, with the segment’s reported net income climbing 41% YoY, helped by balance sheet restructuring activities and stronger loan and deposit margins. Meanwhile, its wealth management and insurance segment delivered record earnings of $841 million, up 20% YoY.

Why I’m comfortable owning TD for years

Since I already own TD and plan to eventually pass the shares on to my kids, I’m less focused on short-term quarterly results. What matters more to me is whether TD is investing now to strengthen its competitive position over the long run.

Interestingly, the bank continues to spend on front-line talent, artificial intelligence (AI), digital tools, and initiatives designed to deepen client relationships.

At the same time, TD is investing in its U.S. franchise, as it plans to open 100 new U.S. stores by the end of calendar year 2028.

That said, one near-term risk remains on my radar as a TD shareholder. The bank is still working to strengthen its U.S. Bank Secrecy Act and anti-money laundering program, with fiscal 2026 remediation and related governance and control investments projected at roughly US$550 million before tax. Significant work remains through calendar 2027, and the process could extend beyond that depending on regulatory reviews and additional remediation needs.

Despite those challenges, TD remains well capitalized. Its Common Equity Tier 1 ratio was 14.3% in the latest quarter, providing ample room to serve clients, continue investing in growth, and return excess capital to shareholders.

Overall, TD checks many of the boxes I want from a long-term investment. It has significant scale, diversified sources of earnings, improving profitability, a dividend, and a willingness to keep investing for the future. As an existing shareholder, I still see TD as an attractive Canadian bank stock to own for decades and pass onto my kids.

The post The Canadian Bank Stock I’d Pass Onto My Kids appeared first on The Motley Fool Canada.

More reading

• How the Fed’s First Rate Hike Since 2023 Shook Up Canadian Markets
• The Canadian Dividend Stock I’d Trust for the Next 20 Years
• Forget the Big Banks: 2 Dividend Stocks to Buy While RBC and TD Take a Breather
• The U.S. Federal Reserve Just Raised Interest Rates: Does it Actually Mean Anything for Canadians?
• TD Bank Pledged $150 Billion in Canadian Investment: Is the Stock a Buy Now?

Fool contributor Jitendra Parashar has positions in Toronto-Dominion Bank. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Shares of Toronto-Dominion Bank (TSX: TD) have delivered market-beating returns to long-term shareholders. Since April 1995, TD Bank stock has returned 1,820%. Moreover, if we adjust for dividend reinvestments, cumulative returns are closer to 5,480%. It means a $1,000 investment in TD stock three decades back would be worth close to $56,000 today.

Despite these outsized gains, the TSX stock is down 22% from all-time highs. So, let’s see if you should buy the TSX bank stock while it’s below $85.  

Is TD Bank stock a good buy in 2025?

TD Bank is making significant progress on its balance sheet repositioning and strategic review while navigating economic uncertainty caused by U.S. tariffs. The bank’s new chief executive officer (CEO), Raymond Chun, is leading a comprehensive strategic review process that is approximately two-thirds complete.

The review focuses on four key areas: capital allocation across business lines, simplifying the portfolio, investing in growth capabilities, and restructuring the bank’s cost base.

The recent sale of TD’s stake in Charles Schwab generated approximately $15 billion in capital, with $8 billion allocated to share buybacks and the remainder reserved for strategic initiatives. The Canadian bank has initiated its buyback program and expects to repurchase up to 100 million shares over the next 12 months.

While focusing on organic growth, TD has categorically ruled out near-term acquisitions, with Chun stating that mergers and acquisitions (M&A) would be too distracting. At the same time, the bank is prioritizing remediating anti-money laundering (AML) issues. TD has budgeted approximately $500 million annually for 2024 and 2025 for AML remediation, with expenses expected to normalize in 2027.

In its U.S. operations, TD is making substantial progress in repositioning its balance sheet. The bank has created approximately $40 billion in buffer space below its $434 billion asset cap and completed a bond repositioning program, which is expected to generate $300 million to $ 500 million in additional net interest income.

Chief Financial Officer Kelvin Tran acknowledged that newly imposed tariffs between the U.S. and Canada would create economic headwinds but expressed confidence in the bank’s ability to manage through this period. TD has observed customers taking a “wait-and-see approach,” with some pausing investment decisions amid the uncertainty.

What is the target price for TD Bank stock?

Despite a challenging environment, TD’s business momentum remains strong. The wholesale banking division achieved a record $2 billion in quarterly revenue in the fiscal first quarter (Q1) (ended in January), following the integration of Cowen. Meanwhile, the wealth management business posted record earnings, with a return on equity nearly double that of its closest competitor.

In Canadian personal and commercial banking, which generates approximately 70% of TD’s earnings, the bank continues to see growth opportunities through deepening relationships with its 14 million clients.

TD maintains a strong capital position with a CET1 (common equity tier-one) ratio target of approximately 13%. Executives hinted at potential additional share repurchases following the conclusion of the strategic review if excess capital remains available.

TD stock trades at a forward price-to-earnings multiple of 10.7, which is lower than its 11.1 times multiple over the past decade. Bay Street expects adjusted earnings per share to expand from $7.78 per share in fiscal 2025 to $9.43 per share in 2027.

Analysts remain bullish on TD stock and expect it to increase by 8.5% over the next 12 months, based on consensus price targets. If we include the dividend payout, total returns could be closer to 13%.

The post Should You Buy TD Bank Stock While it’s Below $85? appeared first on The Motley Fool Canada.

More reading

• How the Fed’s First Rate Hike Since 2023 Shook Up Canadian Markets
• The Canadian Dividend Stock I’d Trust for the Next 20 Years
• Forget the Big Banks: 2 Dividend Stocks to Buy While RBC and TD Take a Breather
• The U.S. Federal Reserve Just Raised Interest Rates: Does it Actually Mean Anything for Canadians?
• TD Bank Pledged $150 Billion in Canadian Investment: Is the Stock a Buy Now?

Charles Schwab is an advertising partner of Motley Fool Money. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Charles Schwab. The Motley Fool has a disclosure policy.