The Basics of Toronto-Dominion Bank

Worldwide Invest Better Day 9/25/2012

For well-nigh 20 years now, the Motley Fool has been here to help you invest better and smarter, using spot-on analysis and a razor-sharp wit. To celebrate Worldwide Invest Better Day on September 25, we are taking some time to get back to the basics -- of investing, that is. In that spirit, I have rounded up some sweet financial sector stocks that have been showing some real sparkle and promise lately.

Without further ado, let me introduce you to the focus of this particular article: Ambitious regional Toronto-Dominion Bank (NYSE: TD  ) .

Northern banks are healthy and wealthy
Big Canadian banks have been performing swimmingly, having weathered the financial storm in fine fettle, particularly when compared with the largest U.S. banks. Like its peers Bank of Nova Scotia (NYSE: BNS  ) , Royal Bank of Canada (NYSE: RY  ) , and Bank of Montreal (NYSE: BMO  ) , TD Bank has been able to maintain decent dividend payments since 2008. This is certainly reflective of the overall health of Canada's banking sector, but U.S. expansion can certainly take some credit for helping to plump TD Bank's balance sheet.

Founded as The Bank of Toronto in 1855 and merging 100 years later with The Dominion Bank, Toronto-Dominion Bank emerged with a branch network of nearly 500 locations across Canada. These days, TD Bank has an extensive branch network in the U.S., and has been able to snag a nice slice of the mortgage loan market as most big domestic banks retreat from that sector. TD is looking to take a bite out of the Big Apple, too, and has announced its intention to become the No. 3 bank in that fair city. This plan is obviously on track, as the bank just this month opened another branch in New York City, pushing it one more location closer to its goal.

As the U.S. economy limps along, Canada is experiencing a bit of a lag as well. A study from TD Bank notes that the housing market is cooling, and the economy as a whole is softening. Bank of Nova Scotia CEO Rich Waugh notes that a soft landing is in store for Canada, however, which will not impact northern banks in a negative way. Indeed, Fitch Ratings seems to concur, saying that a housing correction is a good thing that will contribute to the stability of the banking system and economy as a whole.

The right stuff
TD Bank's recipe for success has withstood the test of time, and its cross-border business model has helped it squeeze profits from both Canadian and U.S. markets. There is no reason to think that a cooling economy up north will slow any of these banks down, particularly when the financial meltdown scarcely dented their bottom lines. TD retains a sunny outlook, and its recent $0.77 dividend payout is testimony to its ability to continue to grow -- as well as supply a nice income check to its investors.

I'll be covering other great stocks over the next couple of weeks, as will my fellow Fools. Check out our special website set up especially for this investing extravaganza at InvestBetterDay.com. There will be lots of great articles posted there through September 25, all with a particularly informative take on various facets of investing. We'd love to have you on board, too -- so click through to the site and prepare to be informed and amused by the never-dull world of investing!

Fool contributor Amanda Alix owns no shares in the companies mentioned above. Motley Fool newsletter services have recommended buying shares of The Bank of Nova Scotia. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On September 21, 2012, at 3:18 PM, Raprox wrote:

    I chucked when I saw the line describing TD Bank as "an ambitious regional". TD Bank is Canada's 2nd largest bank and is among the top 50 banks in the world measured by assets.

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