Toronto-Dominion Bank’s Safe Yield Very Valuable in Current Environment

Investors have become increasingly cautious, or at least aware, of many of the underlying issues in the Canadian housing and oil & gas industries which have become cause for concern among a number of influential analysts and ratings agencies of late.

The idea of Canada’s largest banks being downgraded by a rating agency and cited as a cause for concern by very notable institutions has cast a shadow over Canada’s financials sector.

In addition to this macroeconomic shadow, Toronto-Dominion Bank (TSX:TD)(NYSE:TD) has had its own issues of late, with various scandals relating to customer service at its various branches casting a shadow over the business for some time.

Since late February, TD shares are down almost 8% from its peak on softness relating to broader economic risks as well as idiosyncratic risk for TD itself.

TD’s dip has provided a nice buying opportunity for bullish investors who believe that in the long-term, the most diversified banks and those with the best lending practices will win out, even in “worst case” scenarios which have investors worried at this given point in time.

TD’s diversification into the U.S. market is one example of how this bank has actively made it a strategic choice to diversify when its peers were not, adding a level of safety to the company’s dividend yield and profitability moving forward.

Most analysts point to the increased growth potential of the U.S. market as one of the key drivers of TD stock moving forward compared to its peers, providing a “safety blanket” of sorts for investors relying on this dividend in the long-term.