Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock hasn’t been a great buy this year. It is down around 7% and has been an underperforming investment. The good news is that with a dip in price, however, its dividend yield is now at 4.7%, which is higher than usual. To collect $1,000 in dividends from this stock, you would need to invest approximately $21,300. But is buying the stock a good move for investors to make?
TD is one of the stronger, more versatile banks in the country. It has a strong presence in both Canada and the U.S., and it has been a staple in many investment portfolios. The bank provides a wide range of financial products, including mortgage loans, personal and business banking services, and investment solutions. Despite the current slump, the bank has shown resiliency. Over the trailing 12 months, the company has generated a profit of $14.1 billion, which is 28% of its top line (just over $50 billion).
And while TD’s dividend yield may seem high, the payout isn’t in any danger; TD’s payout ratio is less than 50%, suggesting that there is room for the company to not only continue to pay the dividend but to also increase it in the future.
Trading at less than 11 times earnings, it’s a relatively cheap stock to add to your portfolio. While investors may be wary of bank stocks amid rising interest rates and challenging economic conditions, TD’s strong financials and resiliency over the years makes this a top income stock to buy and hold.
