Toronto-Dominion Bank: Canada's Best Export

| About: Toronto-Dominion Bank (TD)


Since TD Bank's more sizable acquisition, Commerce Bank, in 2008, the bank has gained a solid foothold in the U.S., and is now crowned as "America's Most Convenient Bank."

TD Bank has grown through a number of acquisitions that have led it to become a top 10 bank in the USA with significant retail.

TD is quickly becoming best-known as a U.S. bank with a strong dividend and steadily rising stock price. TD presents healthy exposure to the U.S. banking industry.

Since Toronto-Dominion Bank's (NYSE:TD) more sizable acquisition, Commerce Bank, in 2008, the bank has gained a solid foothold in the U.S. by maintaining and focusing on the highly customer-driven strategies, which have been the core focus in Canada. The philosophy, which was adapted from its Canadian retail operations, has allowed the bank to crown itself America's Most Convenient Bank. While the Canadian banks have grown handsomely in the domestic markets, some have attempted to take on foreign markets, such as Bank of Nova Scotia (NYSE:BNS) and its efforts in developing nations. Bank of Montreal (NYSE:BMO), through acquisition, has increased its presence in America, but the efforts are still bearing non-significant rewards.

In 2004, TD Bank became the majority owner of the remaining Banknorth Group, and renamed it to "TD Banknorth, N.A." Hudson United Bank, based in Mahwah, New Jersey, became a target for TD Bank and was absorbed in July 2005. This acquisition expanded TD Banknorth's presence in New York and extended it into northern New Jersey and Philadelphia. As TD Bank moved into 2006, there was still appetite for acquisition, and the takeover of Financial Services Corp. was completed. This acquisition gave TD Bank additional exposure throughout New Jersey. In the fall of 2007, TD Bank and Commerce Bancorp of New Jersey announced that they had signed a definitive agreement for TD Bank to acquire Commerce Bank in a stock and cash transaction. The deal was valued at $8.5 billion. Advancing into 2010, TD Bank demonstrated that there was still room for ongoing acquisitions and bought The South Financial Group located in South Carolina. This would give TD Bank significant exposure along the Eastern side of America. In late 2010, TB Bank moved into the automotive finance market with the purchase of Chrysler Financial, which was later renamed to "TD Auto Finance."

Today, TD is the second largest bank in Canada by market capitalization and based on assets. It boasts the sixth largest bank branch network in North America. Within the past decade, TD Bank has grown to become one of the 10 largest banks in the US, servicing more than 8 million customers through a 1,300 branch network stretching the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. TD Bank has made its presence known not only through the significant acquisitions of the past decade, but also through marketing exercises, which include TD Garden, a multi-purpose arena in Boston, Massachusetts and the TD Arena located in Charleston, South Carolina. Further, TD Bank, America's Most Convenient Bank, was named "Best Big Bank" in MONEY's "Best Banks 2013" list.

TD Bank currently offers its shareholders a rock-steady dividend, providing greater than 3.5% dividend yield payable on a quarterly basis. Shares in TD Bank have steadily been appreciating year after year, excluding the global financial crisis of 2008-09. Not only has it paid a steady quarterly cash dividend and grown its stock price, but it has also increased the dividend payout. In 2011, it was paying a quarterly payment of .30/per share. Today, it is paying .47/per share, representing a 56% increase in the dividend payout within 3 years. This equates to an over 10% annual increase in dividends, an ideal situation for any long-term shareholders looking for cash flow and income from dividend distributions.

As TD Bank moves forward with its Canadian roots but American focus, it has separated itself from the balance of the Canadian banks, and is the first Canadian bank to make significant inroads into the American retail banks. Visit New York City, and you will surely find one of many TD Bank locations just as you would in Toronto. Although it is still too early to fully understand if TD Bank has made all the correct moves and how its long extended efforts in the U.S. will play over the next decade, investors, including myself, have not been shy to accumulate TD Bank shares. While other Canadian banks continue to trade between a 4%-5.5% dividend yield payout, TD Bank investors are clearly buying the stock for appreciation, as we have seen the dividend rates drop to around 3.5%. Overall, TD Bank provides an opportunity for exposure to the American banking industry. It has a strong placement within the Canadian banking industry, and a steady and strong dividend coupled with continuous dividend hikes due to increasing profits. TD Bank may have its roots planted in Canada, but it is becoming increasingly popular to American banks and investors alike.

Disclosure: I am long TD Bank. I have no positions in any other stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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