TD BANK $54.16 (Toronto symbol TD; Shares outstanding: 1.8 billion; Market cap: $100.2 billion; TSINetwork Rating: Above Average; Dividend yield: 3.8%; www.td.com) continues to benefit from gains in retail banking in both Canada and the U.S. The bank is also profiting from last year’s deal with Aimia (Toronto symbol AIM) to become the main credit card issuer for the popular Aeroplan travel-reward program.
As a result, TD’s earnings, excluding one-time items, rose 4.9% in the three months ended January 31, 2015, to $2.12 billion from $2.02 billion a year earlier. Per-share profits gained 5.7%, to $1.12 from $1.06.
Revenue rose slightly, to $7.61 billion from $7.57 billion. The bank set aside $362 million to cover potential bad loans in the latest quarter, down 29.1% from $456 million a year earlier.
TD has raised its quarterly dividend by 8.5%, to $0.51 from $0.47. The stock yields 3.8%.
Falling interest rates will cut the income TD earns on its loans. However, its expanding U.S. operations, boosted by the high U.S. dollar, will keep pushing up profits. The stock trades at just 11.9 times this year’s estimated earnings of $4.54 a share.
TD Bank is our #1 safety-conscious buy for 2015.
