Toronto-Dominion Bank (TD.TO)

He's going to pull the lens back, as he likes to look at things from a macro perspective. In 2020, we went from falling interest rates for 40 years to what is likely rising long-term interest rates for the next 25-30 years. That benefits banks in particular.

If you look at the XLF in the US, after going nowhere from 2008-2021, it finally made a new high. Beginning of a new long-term bull market that probably goes on 10-12 years. During that time, earnings go up and so do dividends. The multiple expands.

TD's had a wonderful year this year. So have the US banks, and he's used JPM as a Top Pick many times. This year, the European banks joined in. 95% of global banks are trading above a rising 200-day MA. Don't be afraid of a bull market. These are dividend growth stocks, and when there's inflation a rising stream of income is pretty attractive to offset the rising cost of living. TD looks great.

Under new CEO, cleaning up past errors in US. Progress under new CEO is impressive, and market's recognizing that. 

Strategy to grow at high single-digit pace is credible; with the dividend you get a good line of sight to a low double-digit total shareholder return. Trimmed not that long ago. Should be a core part of a well-diversified NA portfolio, especially as a dividend grower. Unlikely to repeat this year's performance in 2026.

A perfect example of what can happen -- when sentiment turns on a name, there tends to be a pile-on. People can't hold it, and there's a lot of indiscriminate selling, the index rebalances, and there's even more selling. Result is that the valuation just gets annihilated. 

To get a return like this on an income name seems, to him, very weird. But you have to take these opportunities when they come. Earnings have rebounded and the multiple has re-rated. He has trimmed for some clients, but still holds and is quite constructive.

It was in the penalty box a year ago but managed to fix things and has been the best performing bank stock over the year. Although their growth in the US is limited they earn good profits in Canada so it has worked out for the best.

His firm was holding its nose and buying in the $75-80 range, and incredible run surprised them. Money, broadly, has been coming into Canada (though telecoms and rails are languishing).

Not purchasing right now. For clients in need of cash or those who have a big weighting, he's been trimming bank holdings a bit, but not selling 50% of a position or anything like that. Pricing power, diversified business unit, capital markets a huge winner this year. Mixed picture for 2026-27.

Likes both for the longer term. Owns both. Hesitant to add to either right now, given the move each has had. TD has moved up the most this year. Interestingly, RY has moved up the least. So it's traditional premium versus the other banks has narrowed.

Both released really good earnings. Both beat in capital markets, with focus on wealth management. Instead, she'd look at traditional banking metrics such as PCLs and loan growth.

Better places to deploy capital right now with higher and growing dividends. See her Top Picks.

The issue is that can't buy anything in the US, but that's a benefit, because it gives TD a chance to focus on their US franchise (and improve its numbers. The stock will likely pull back from here. Could buy it next year lower. The positives are there for Canadian banks, but they've all run up.

Believes inflation will continue to surprise to the upside, so need to own sectors and themes that will benefit in that world. Everywhere in the world, banks are doing well. Backdrop is really positive.

Canadian banks are really high quality. Great job growing dividends, even through difficult banking environment. Have to watch mortgage delinquencies, which remain quite low. Lots of refinancing this year. Look at how they're behaving while the markets are a little sloppy. That's a great tell.

This name is trading very, very well. He'd be a buyer of the Canadian banks here. You'll get a rising stream of income  that will offset a rising cost of living.

One of his largest positions. Still likes it. Trades at a bit of a gap to the rest of the banks because of those US problems. Constrained growth in US might not be a bad thing, as ROE there was a not-great 8-10%. Over-capitalized, so he's waiting for announcements on share buybacks or other projects.

Earnings growth has come from the capital markets and wealth management businesses, which benefit from the strong stock market. The core retail business for all Canadian banks is sluggish; mortgage demand is weak. TD and the other banks are using AI to reduce the workforce.

Put together an excellent team to address recent regulatory issues, and it's been upfront with investors on spending requirements. Still trades at discount to the group, yet it's a premium bank. Divisions are still very high quality. Despite runup, more to go. He's holding and buying, not selling.

His firm owns RY, BMO, and TD as cornerstone holdings in its dividend-growers mandate. Canadian banking is a stable, well-regulated oligopoly. Structurally profitable, heavy barriers to entry. Diversified by line of business and by geography. Its fee-based businesses should be very profitable this quarter.

One fly in ointment:  tepid loan growth demand, especially in mortgages, and to a lesser extent in commercial loans. Thinks the worst of credit loss provisions is behind the Canadian banks.

Some are concerned about growth cap in US. He likes it for the amount of cash on balance sheet, so it can withstand any weakness in the Canadian economy. Grows its dividend. Hold on, don't try to time the market. Well run. Intends to expand wealth management, with a much higher ROE.

Don't add at these levels. Last quarter was a beat, better on credit loss provisions. Still potential headwinds in US with US retail. Trading in line with the group, no longer at a discount. Decent growth of ~7%.

A great time to sell some calls on it. He wouldn't add to this one, but would to BMO and CM. 

Best-performing bank this year. (Let's ignore capital gains and tax losses for simplicity in answering the question.) Looking ahead, no longer at the compelling value it was before. Great job clearing up concerns over asset cap. 

Whole Canadian banking sector is fully valued, trading effectively at record highs on valuation. Not time to load up. Time to take some profits and invest in more defensive names, as Canadian economy is on a more fragile footing than other parts of the world.