p>TORONTO-DOMINION BANK $83 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 909.2 million; Market cap: $75.5 billion; Price-to-sales ratio: 2.7; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.td.com) is Canada’s second-largest bank, with total assets of $773.7 billion. In December 2011, TD completed its $6.8-billion purchase of MBNA’s Canadian credit card operations from Bank of America (New York symbol BAC). These assets are a great fit for TD: They added 1.8 million clients to its 4.0 million credit card accounts. As well, MBNA is the largest MasterCard issuer in Canada. That diversifies TD’s credit card business beyond its current Visa cards.
The MBNA division should add $0.05 a share to TD’s annual earnings in the first year, and $0.10 a share thereafter.
Without integration costs and other unusual items, TD earned $1.8 billion in the quarter ended January 31, 2012. That’s up 9.0% from $1.6 billion a year earlier. Earnings per share rose 7.5%, to $1.86 from $1.73, on more shares outstanding.
The bank set aside $404 million to cover bad loans in the latest quarter, down 4.0% from $421 million a year earlier. Revenue rose 3.4%, to $5.6 billion from $5.5 billion.
The stock is up 9% since the start of 2012, but it still trades at a reasonable 11.4 times the $7.31 a share that TD will likely earn in its current fiscal year. The $2.88 dividend yields 3.5%.
TD Bank is a buy.
