Many U.S. banks still have relatively small dividend yields, and their ability to raise their payouts is governed by the Federal Reserve. If you want to capitalize on the banking sector's growth catalysts, but also want a safe and substantial income stream, Toronto-Dominion Bank (NYSE:TD) could be worth a look. This Canadian-based bank has one of the most reliable dividends anywhere in the market and just gave its shareholders a big raise.

TD Bank in a nutshell

Toronto-Dominion Bank, better known to consumers as TD Bank, is the sixth-largest North American bank and has vast operations in both Canada and the United States. It also owns more than 40% of TD Ameritrade.

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Over the past couple of decades, TD has grown rapidly, both organically and through acquisitions, including credit card portfolios of Chrysler Financial, MBNA, and Target. Recently, the company acquired Scottrade Bank as part of TD Ameritrade's acquisition of the Scottrade online brokerage. Perhaps the most significant acquisition was New Jersey-based Commerce Bank in 2008, which greatly expanded TD's U.S. footprint and helped grow its customer-focused business model.

While most of the banking industry is reducing branch counts and emphasizing mobile and online banking, TD still prides itself on convenient, personal customer service. The self-proclaimed "America's Most Convenient Bank" has evening and weekend hours and tries to make its customers feel like more than "just another bank account."

There are several reasons to love TD bank as a long-term investment, such as its diverse revenue stream, the aforementioned freedom to set its own dividend policy, strong market share in key markets like New York City, and its strong asset quality.

Strong growth and a high-quality banking operation

If you read only the headlines of TD's most recent earnings report, it may seem like the bank isn't doing great. Reported earnings per share (EPS) fell 6% year over year, but this was mainly due to one-time adjustments related to the U.S. tax reform bill. Even though TD is a Canadian bank, its substantial U.S. operations were significantly affected.

Excluding the effect of tax reform, TD's EPS grew by an impressive 17% year over year. Revenue rose by 4% on an adjusted basis, including 6% growth in net interest income. And despite this growth, expenses actually dropped slightly, which is why earnings grew as much as they did.

Especially impressive was the growth in TD's U.S. retail-banking operations, where earnings grew by a staggering 28% on a tax-adjusted basis. Deposits grew by 8% and the bank's net interest margin expanded by 16 basis points over the past year, thanks to rising rates. Furthermore, TD is mainly on the East Coast and has tremendous U.S. growth potential in the years ahead.

TD is also well-capitalized and has high asset quality. In TD's mortgage portfolio, for example, 89% of borrowers have FICO scores of 700 or higher, and the majority of loans are secured by properties with less than 60% loan-to-value ratios. The bank has one of the highest credit ratings in the industry and has been named "safest bank in North America" by Global Finance magazine.

Excellent for income

It's tough to find a bank with a better dividend history than TD. Not only has the bank paid dividends since before the Civil War, but it has increased its payout at an 11% annualized rate for more than two decades. As a Canadian bank, TD wasn't forced to slash its payout in the wake of the financial crisis like most U.S. banks.

This year is no exception. Along with its solid earnings report, TD Bank just declared a quarterly dividend that represents an 11.7% increase over the previous level. The stock now yields nearly 3.6%, a rarity in the banking sector, especially with such safety (payout ratio below 50%) and consistency. [Note: It's important to mention that TD's dividends are paid in Canadian dollars, so they may rise and fall in terms of U.S. dollars in response to currency fluctuations.

The best dividend stock in banking?

To be clear, I'm not saying that TD Bank pays the highest dividend in the banking sector. Instead, I'm saying that it's tough to match the combination of a rock-solid dividend history, yield above 3%, and a stable, high-quality banking operation. These are the reasons I own TD Bank in my own stock portfolio and why I think it could be the best all-around dividend stock in the banking industry.

Matthew Frankel owns shares of The Toronto-Dominion Bank. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.