Shares of Toronto-Dominion Bank (TSX:TD)(NYSE:TD) have been on a tear since the bank hit lows below $50 per share in March of last year. On a year-over-year basis, TD Bank’s stock has increased approximately 60% as investors have flocked to dividend paying equities that got bid down to levels investors saw as extreme value.
At these levels, some investors may be on the fence about picking up shares right now. Currently, shares of TD Bank yield 4.1%. That’s a healthy dividend for sure, but well shy of the high single-digit yield this stock was providing one year ago.
That said, I think with the company’s impressive recent earnings beat, capital inflows into big banks may continue for some time. In particular, I think investors will be focused on the bottom line impact of the removal of provisions for credit losses in the coming quarters. Like its peers, TD over-provisioned for these credit losses, so as long as these provisions continue to be removed in the coming quarters, investors can expect outsized gains and earnings per share growth.
Additionally, TD has done a good job of streamlining its operations of late. TD has, in many ways, led the charge among its peers in becoming more technologically-driven. The company recently announced the closure of dozens of US branch locations, focusing instead on its online banking capabilities. I think this is likely to pay dividends (figuratively and literally) over the long-term for investors.
Invest wisely, my friends.