Toronto-Dominion Bank (TD 1.98%) is the parent company of TD Bank, one of North America's largest banks. Its businesses include a Canadian personal and commercial banking unit, U.S. retail banking, wealth management and insurance in Canada, and wholesale banking that serves institutional clients (e.g., corporate and investment banking).
Taking a look back, how would you have fared if you'd invested $1,000 in the stock five years ago?
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Total return and investment sum
Toronto-Dominion Bank's stock gained 63.8% over the last five years through Aug. 1. However, that doesn't include dividends. When factoring in those payouts, the stock had a total return of 103%.
That means your $1,000 investment would have more than doubled in five years. Applying the 103% return to your initial $1,000 investment equals $2,030.
This sounds impressive. After all, who wouldn't want to double their money in five years? You can grow your wealth pretty quickly at that rate. But it's important to put that return in context.
Comparison
One way to do that is by comparing the stock's return to a broad index and a bank stock index. That's the return you could have gotten if you'd invested passively over those five years.
The S&P 500 index produced a total return of 105.6%, and the S&P 500 Banks index returned an even better 149.8%. Both bested Toronto-Dominion Bank's return.
If you'd invested the $1,000 in the S&P 500, you'd have $2,056 today. Before fees, an exchange-traded fund or mutual fund investing in the bank index would have grown your investment to $2,498.
Of course, past returns provide no guarantee about future results. However, it's a useful exercise to see how a stock investment would have fared in the context of the broader market and sector. In this case, Toronto-Dominion Bank's stock didn't perform as well.
