By Karen Thomas, MSc, CFA at The Motley Fool Canada
For long-term investors looking to ride out market volatility, Toronto-Dominion Bank (TSX:TD) is worth considering today. Over the years, this Canadian dividend stock has been supported by a solid track record of both dividend growth and share price appreciation.
After a period of uncertainty related to regulatory issues and big restructuring charges and fines, TD Bank has made significant strides in protecting and advancing its business. In fact, a strong balance sheet and strong growth trends have combined to send TD Bank stock surging almost 50% in the last year. When markets get rough, it is this strength that investors will be able to take comfort in.
Let’s take a closer look at why TD Bank stock is a Canadian dividend stock to buy today.
TD’s first quarter at a glance
The bank’s first quarter can be summarized in two words – momentum and value. Records were broken in TD’s Canadian personal and commercial banking, insurance, and wholesale banking. These records were driven by a strong macro environment, with strong deposit and loan volumes, as well as solid expense management.
All told, TD Bank stock reported adjusted earnings per share (EPS) of $2.44, which was well above analyst estimates, which were calling for EPS of $2.26. This was 20% higher than the same period last year and a record for the bank. Investors have driven TD Bank stock higher in the last year in response to this momentum.
A Canadian dividend stock that stands the test of time
In the last 30 years, TD Bank stock has paid out a dividend. This dividend has grown more than 1,500% and it has been reliable through the good and bad times. Reflecting on the last 30 years, a few major crises easily come to mind.
In 2000, the tech, or dot-com, bubble was a crisis that caused major stock market volatility and financial troubles. Then in 2008, we had the global financial crisis, when we witnessed the demise of Lehman Brothers. This liquidity crisis triggered a stock market crash. Finally, we had the pandemic in 2020, which also triggered a stock market crash.
Through it all, TD Bank stock continued to be a beacon of strength. As you can see from TD Bank’s stock price graph above, the stock continued to perform well over the long run despite these disruptions. It’s evidence of the bank’s reliability and resilience in the face of chaos. This performance demonstrates the value of this Canadian dividend stock when markets get rough.
Looking ahead
The momentum at TD Bank continues. TD is targeting 6% to 8% EPS growth in 2026, a growth target that management thinks they can beat. Also, TD has a 13% ROE target for 2026. This is being driven by TD’s expense reduction program as well as its capital position and balance sheet. Simply put, expenses are falling and returns are rising.
Looking even further ahead, TD Bank is targeting ROE of 16% in 2027 as the bank further improves its capital position and as it continues to reduce expenses.
The bottom line
TD Bank stock is a prime Canadian dividend stock for investors who would like a reliable dividend and solid long-term growth. Buy this stock in preparation for the next wave of stock market turmoil.
The current dividend yield on TD Bank stock is 3.3%.
The post The Canadian Dividend Stock I’d Lean on When Markets Get Rough appeared first on The Motley Fool Canada.
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Fool contributor Karen Thomas 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.
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