Toronto-Dominion Bank (TD)
Canada’s biggest bank when it comes to doing business in the U.S. is Toronto-Dominion Bank (TD), which has branches running from Maine all the way down the East Coast to Florida, where thousands of Canadians spend the winter avoiding the cold.
For the most part, its U.S. expansion has been successful, although it did pay a financial price to claim this prize. Nonetheless, its U.S. personal and commercial banking in the first nine months of the year increased 15% year-over-year to C$1.2 billion. The U.S. operations generate profits that are 44% of those in its Canadian personal and commercial banking unit.
TD’s Canadian retail unit, which is highly respected amongst Canadian customers, increased adjusted net income in the first nine months of the year by 9%. That’s good, but not quite the growth down south.
While investors have reason to worry that the same Q4 problems that beset BMO in the U.S. might also happen to Toronto-Dominion, I see TD side-stepping the issues that knocked BMO off stride. Analysts expect TD to increase Q4 adjusted net income by 8.7% year-over-year to C$1.9 billion.
If there were any doubt the U.S. is a vital part of its business, the news of Ed Clark’s successor — TD announced in April that Bharat Masrani, its head of U.S. banking, was taking over as CEO in November 2014 — should eliminate any such talk.
Much like Royal Bank, the fact that TD has already bumped the dividend twice this fiscal year means it’s doubtful to happen in Q4. Also, like RY, its 3.7% dividend yield is still better than its large American counterparts.
TD Rating: 7.5