So, you’re looking at Toronto Dominion Bank stock. Honestly, it’s been a wild ride. If you had asked anyone a year or two ago, they might have told you to run for the hills. The headlines were brutal. A massive $3.1 billion fine in the U.S. for money laundering failures? That’s the kind of news that makes even seasoned investors sweat. But here we are in 2026, and the narrative has shifted in a way that’s caught a lot of people off guard.
Basically, TD spent most of 2025 in the "penalty box." They had to deal with an asset cap in the States, a massive leadership shuffle, and a reputation that was, frankly, a bit battered. But if you look at the numbers lately, the "green machine" is starting to hum again.
The $3 Billion Elephant in the Room
You can't talk about Toronto Dominion Bank stock without acknowledging the anti-money laundering (AML) scandal. It wasn't just a fine; it was a systemic failure. Regulators found that the bank basically left the door open for years. It was embarrassing. More importantly for shareholders, the Office of the Comptroller of the Currency (OCC) slapped them with a $434 billion asset cap.
That cap is a growth killer. Or at least, it was supposed to be.
What most people missed is how aggressively TD restructured its U.S. balance sheet to work around that limit. They didn't just sit there. They sold off lower-margin assets and reinvested that room into higher-margin businesses like wealth management and wholesale banking. It’s a classic pivot. Instead of growing bigger, they decided to grow "smarter."
Why the New Leadership Actually Matters
Bharat Masrani’s retirement wasn't exactly a surprise, but the timing was critical. When Raymond Chun took over as CEO in February 2025, he didn't just inherit a bank; he inherited a massive cleanup project.
Chun has been a TD lifer, more or less. He ran the Canadian personal banking side—which is the bank's crown jewel—and he’s brought that "efficiency first" mindset to the U.S. operations. He’s already pushed through a cost-savings plan targeting over $2 billion in annual cuts.
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Some of that is coming from AI-driven automation, which sounds like a buzzword, but in banking, it actually translates to fewer errors in compliance and lower headcount.
Dividends and the Buyback Machine
Let’s get to the part people actually care about: the cash.
One of the most surprising things about Toronto Dominion Bank stock over the last twelve months has been the sheer amount of capital they’ve thrown back at shareholders. Just this month, in January 2026, the bank announced it’s launching a new share buyback program for up to $7 billion. This follows the $8 billion they already deployed from selling their remaining stake in Charles Schwab.
That’s $15 billion in capital returns in a very short window.
The dividend yield is sitting around 3.3% right now. It’s not the 5% yield you could have snagged during the panic of 2024, but it’s arguably much safer now. The quarterly payout just ticked up to $1.08 CAD per share. For a bank that was supposedly "in trouble," that’s a pretty loud statement of confidence.
What’s the Catch?
It’s not all sunshine.
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A recent TD survey found that 2 in 3 Canadians are planning big spending cuts in 2026. Why does that matter for the stock? Because TD is still, at its heart, a Canadian retail bank. If Gen Z and Millennials—who are feeling the pinch the most—stop taking out loans and start missing credit card payments, TD’s "provisions for credit losses" (PCLs) will climb.
Management is already guiding for PCL ratios in the 40-50 basis point range. That’s a fancy way of saying they expect more people to struggle with their debt this year.
Also, the U.S. asset cap isn't gone. It’s a leash. While they’ve gotten creative with the balance sheet, they still can't just go out and buy another bank or expand their branch network like they used to. They are playing a game of Tetris with their assets.
Key Metrics for 2026
- Current Dividend: $1.08 CAD per share (quarterly)
- Targeted Cost Savings: $2.0–$2.5 billion annually
- New Buyback Plan: Up to 61 million common shares ($7 billion)
- Common Equity Tier 1 (CET1) Ratio: Roughly 14.8% (very high for the industry)
The Real Potential in Wealth Management
The real "hidden" story is the push into wealth management.
CEO Raymond Chun has been very clear that fee-driven businesses are the future. Why? Because they don't require the same amount of capital as traditional lending. If you manage someone’s money for a fee, you don't have to worry about an asset cap in the same way you do with a $500,000 mortgage.
They are hiring wealth advisors at an aggressive clip in both Canada and the U.S. It’s a high-margin business that provides a nice buffer when interest rates are volatile.
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Actionable Insights for Investors
If you're holding or looking at Toronto Dominion Bank stock, here is the reality of the situation:
Watch the PCLs. Keep a close eye on the quarterly earnings reports. If the provision for credit losses starts creeping toward 60 basis points, the "Canadian consumer is resilient" argument starts to fall apart.
The "Safety" Play. With a CET1 ratio near 15%, TD is one of the most overcapitalized banks in North America. They have a massive cushion. For a conservative investor, this is essentially a fortress balance sheet.
Valuation Gap. For years, TD traded at a premium to its "Big Six" peers like Royal Bank or BMO. That premium evaporated during the AML scandal. The stock has recovered significantly—up over 40% from its 2024 lows—but it still hasn't fully regained its "gold standard" valuation.
Wait for the Cap. The biggest catalyst for the stock will be the eventual removal of the U.S. asset cap. Don't expect this in early 2026. Regulators usually want to see a couple of years of perfect behavior before they let a bank off the hook.
Basically, TD has gone from a "crisis" stock to a "transformation" stock. The worst of the legal damage is in the rearview mirror, and now it’s just a question of how well Raymond Chun can execute on his efficiency goals. It’s a boring, profitable, capital-heavy play—exactly what most bank investors are looking for.
To stay on top of this, you’ll want to track the bank’s adjusted efficiency ratio. If it stays below 55% while they continue these massive buybacks, the stock is likely to keep grinding higher, even if the broader Canadian economy feels a bit sluggish. Focus on the upcoming Q1 2026 earnings call for updates on the new buyback's progress; that will be the primary driver of the share price in the short term.