Are you considering trading Toronto-Dominion Bank (TD) stock?
In this article we’ll explore TD’s history, business segments, and recent controversies, including the anti-money laundering (AML) penalty. 

• TD Bank, Canada’s second-largest lender, is facing scrutiny over its anti-money laundering (AML) program. The U.S. Department of Justice is investigating how the bank was potentially used by Chinese drug traffickers and criminals to launder money from fentanyl sales.

These allegations significantly impacted TD Bank’s stock price. Shares slumped 5.8% on Friday, May 3rd, 2024, dropping to their lowest level in over three years.

TD Bank acknowledges the regulatory probes and claims a comprehensive overhaul of its AML program is underway in both the U.S. and globally. They’ve invested over C$500 million in improvements and hired AML professionals to address the issues. The bank emphasizes cooperation with regulators and ongoing efforts to meet their compliance obligations.

We’ll also analyze the recent stock price fluctuations, including analyst ratings and future outlook, also will explore TD’s financial performance, dividend strategy, and recent institutional investor activity.

Company overview

Toronto-Dominion Bank Group, commonly known as TD Bank, is headquartered in Toronto, Canada. It has a long history, serving over 27.5 million customers globally with approximately 95,000 employees. The group offers a comprehensive range of financial products and services through four key business lines:

• Canadian Personal and Commercial Banking: caters to personal banking needs through TD Canada Trust, supports small businesses with TD Canada Trust and Business Banking, and offers credit card services through MBNA.

• U.S. Retail: focuses on personal banking services under the TD Bank brand, provides auto financing through TD Auto Finance (U.S.), delivers wealth management services through TD Wealth (U.S.), and reflects TD’s investment in Schwab.

• Wealth Management & Insurance: includes wealth management services provided by TD Wealth (Canada) and TD Direct Investing, along with insurance products offered by TD Insurance.

• Wholesale Banking: services to larger institutions and governments, providing financial solutions tailored to their specific needs.

TD Bank strives to differentiate itself through a strong brand built on a well-established business model. This model prioritizes consistent earnings growth while maintaining a robust risk management culture.

TD Bank has a significant presence in both Canada and the United States. They are considered a top retail bank in both countries, further complemented by a substantial wholesale business that aligns with their established retail footprint.

To stay up-to-date on Toronto-Dominion Bank’s current performance, you can visit their stock quote page on Toronto Dominion Bank stock quote. 

• Controversies

It’s important to know that TD Bank recently faced a penalty due to non-compliance with anti-money laundering and terrorist financing regulations. Canada’s financial intelligence agency levied a $9.2 million penalty for failures such as:

• Missing required reports of suspicious transactions.
• Inadequate assessment and documentation of money laundering and terrorist financing risks.
• Not implementing special measures for high-risk situations.
• Ongoing investigations in the U.S. resulted in an initial provision of $450 million related to an anti-money laundering inquiry. The bank is actively working to address these deficiencies.

Recent fluctuations in TD Bank’s stock price

The Toronto-Dominion Bank’s stock price experienced a significant drop on Friday, trading down 6.8%. This decline brought the share price down to $54.15, which represents the lowest point and the closing price for the day. This stands in contrast to the previous closing price of $58.08, highlighting the notable decrease.

It’s important to note that while the stock price has dipped recently, trading volume actually increased by 65% during mid-day trading. This suggests there may be heightened activity surrounding the stock, but the nature of that activity (buying or selling) isn’t clear from the information provided.

Several analyst firms have recently issued reports on TD shares, offering mixed outlooks:

• Jefferies Financial Group initiated coverage with a “hold” rating in February.

• Barclays assigned an “equal weight” rating in March.

• Scotiabank upgraded the stock from “sector perform” to “sector outperform” in April.

Currently, the overall analyst consensus leans towards a “hold” rating, with an average price target of $89.33 which suggests potential for future growth.

Financial Performance and Future Outlook

Looking at financial metrics, TD Bank boasts a healthy quick ratio (0.99), current ratio (0.99), and a low debt-to-equity ratio (0.09), indicating strong liquidity and financial stability. Recent earnings reports were positive, with the bank exceeding analyst expectations for EPS in the first quarter of 2024. Revenue also came in above consensus estimates. Analysts on average predict continued positive EPS growth for the current year (5.77 EPS).

Dividend Increase and Institutional Investors

On a positive note, TD Bank recently announced an increase in their quarterly dividend, bringing the annualized dividend to $3.01 and a yield of 5.50%. This reflects a commitment to rewarding shareholders.

Institutionally, there have been recent adjustments to positions in TD Bank. Notably, several firms increased their holdings in the first quarter, including Mediolanum International Funds Ltd, Lorne Steinberg Wealth Management Inc., Pacific Wealth Strategies Group Inc., FORA Capital LLC, and FinTrust Capital Advisors LLC. This suggests some institutional confidence in the bank’s future prospects.

While TD Bank’s stock price has experienced a recent decline, it’s important to consider this within the broader context of analyst ratings, financial performance, and institutional investor activity. The bank boasts strong financial metrics, positive earnings reports, and a commitment to rewarding shareholders through dividends. While the short-term price movement is concerning, the long-term outlook may be more positive, especially considering the analyst price targets and recent institutional buying.

Why Trade TD Stocks Today

Factors to consider when deciding whether to trade TD Bank stock (TD) today.

Short-Term Potential

• TD stock price experienced a 6.8% drop on Friday, May 3rd. This could be a buying opportunity for investors looking for a potential entry point at a lower price. However, it’s important to understand the reasons behind the drop before investing.

• Despite the price decline, trading volume for TD stock increased by 65% during mid-day trading on Friday. This heightened activity suggests there may be more interest in the stock, but it doesn’t necessarily indicate if it’s buying or selling pressure.

Long-Term Potential

• TD Bank has a healthy financial position with a solid track record. They have a good quick ratio, current ratio, and low debt-to-equity ratio, indicating strong liquidity and financial stability.

• The bank recently exceeded analyst expectations for earnings per share (EPS) in Q1 2024, and revenue also came in above estimates. Analysts predict continued positive EPS growth for the current year.

• TD Bank recently increased their quarterly dividend, reflecting a commitment to rewarding shareholders. The current annualized dividend yield is 5.50%.

• While the overall analyst consensus leans towards a “hold” rating, the average price target of $89.33 suggests potential for future growth.

The recent dividend increase suggests a potentially higher yield for 2024 compared to 2023.

Overall, the decision to trade TD stock today depends on your investment goals and risk tolerance. While the recent price dip presents a potential buying opportunity, the reasons behind the drop should be investigated.

Here are some factors to consider:

• The overall stock market performance can impact TD’s stock price.
• The ongoing investigations related to anti-money laundering (AML) could pose some risk.
• If you’re a long-term investor, short-term fluctuations may be less concerning.

While TD Bank faces recent challenges, the Canadian stock market offers a variety of options for day traders. Here are some of the top contenders according to various financial sources best canadian stocks for day trading:

• Resource and Energy Sector: Companies like Canadian Natural Resources, Tourmaline Oil Corp, Vermilion Energy, and Baytex Energy are all prominent players in Canada’s resource and energy sector, known for potential volatility but also strong growth opportunities.

• Gold Exploration and Royalties: Torex Gold Resources and Freehold Royalties Ltd. are names to watch in the gold exploration and royalties space, which can experience significant price fluctuations.

• Real Estate Investment Trusts (REITs): Diversification is key, and Brookfield Asset Management, a diversified REIT, offers exposure to the Canadian real estate market.

• Building Materials: Taiga Building Products Ltd. might be of interest for day traders looking at companies in the building materials sector, which can be sensitive to economic conditions.

• Financial Services: Guardian Capital Group Limited, a financial services company, could be another option for those seeking fast-paced trading opportunities.