Valued at a market cap of $194 billion, Toronto-Dominion Financial institution (TSX:TD) is among the many largest firms in Canada. Within the final 10 years, TD Financial institution inventory has returned 107% to shareholders, and after adjusting for dividend reinvestments, cumulative returns are nearer to 215%.

Regardless of these outsized returns, TD Financial institution gives you a tasty dividend yield of three.9%, given its annual dividend per share of $4.21 in fiscal 2025 (resulted in October). So, so that you can earn $1,000 in annual dividends, it is advisable personal 238 shares of the banking large price an funding of greater than $27,000 right now.

Whereas TD Financial institution is a part of a cyclical sector, the corporate has raised its annual dividend from $2.16 per share in 2016 to $4.21 per share in 2025. Analysts forecast the payout to extend to $4.55 per share in 2029.

Again in November 2016, you’d have needed to buy 463 TD shares price $27,645. At this time, 463 TD inventory would make it easier to earn $1,950 in annual dividends, enhancing the yield at price to greater than 7%.

Let’s see in case you ought to personal TD Financial institution inventory proper now.

Is TD Financial institution inventory nonetheless an excellent purchase proper now?

Toronto-Dominion Financial institution is executing a sweeping transformation aimed toward reclaiming its place as a top-performing Canadian lender after years of declining efficiency.

CEO Raymond Chun outlined an formidable plan on the financial institution’s investor day to spice up return on fairness to 16% by fiscal 2029 whereas restructuring the group’s price base.

The technique represents a decisive pivot for TD, which has seen its ROE (return on fairness), earnings development, and shareholder returns lag behind these of its friends in recent times.

The financial institution is concentrating on $2 billion to $2.5 billion in annual price financial savings by means of a complete program that touches each facet of its operations. TD goals to pursue structural modifications by means of distribution transformation, automation, the deployment of synthetic intelligence, and vendor consolidation.

The corporate expects to attain a mid-50s effectivity ratio, down from the present 58%, with optimistic working leverage annually. For fiscal 2026 particularly, TD is guiding to three% to 4% expense development and a 13% ROE because the transformation features momentum.

Chief Danger Officer Ajai Bambawale emphasised the financial institution’s credit score high quality stays robust regardless of financial uncertainty from tariffs and commerce tensions.

TD has constructed $600 million in reserves over three quarters to deal with potential impacts, together with over $400 million for industries uncovered to tariffs and practically $200 million for shopper impacts. The financial institution’s actual property secured lending portfolio reveals resilience with a mean credit score rating of 792, and just one% of debtors have scores beneath 650, mixed with loan-to-value ratios above 75%.

Relating to the 2026 fee reset interval, when 29% of mortgages mature, Bambawale famous that 64% of shoppers will see decrease funds, whereas 93% of these dealing with greater funds stay inside stress take a look at thresholds.

Is TD Financial institution inventory undervalued proper now?

Analysts monitoring TD Financial institution inventory forecast adjusted earnings per share to extend from $7.81 in fiscal 2024 to $11 per share in fiscal 2029. At this time, TD Financial institution inventory trades at 13.2 instances ahead earnings, which is greater than its five-year common of 10.9 instances.

If TD Financial institution inventory reverts to its historic imply, it ought to commerce round $121 in October 2028, indicating an upside potential of 8%. If we alter for dividends, cumulative returns may very well be nearer to twenty%.