TD Bank: Buy, Sell, or Hold in 2026?

Toronto-Dominion Bank (TSX:TD) is back in the spotlight after its shares have surged nearly 54% over the last year, outperforming the broader market and most other Canadian bank stocks by a wide margin. Just a year ago, uncertainty around regulatory issues and restructuring in the U.S. weighed heavily on its investors’ sentiments. However, it looks very different today, with improving earnings trends and an improving capital position changing the narrative.

Still, a rising stock price alone may not answer all the big questions investors practically care about most. In this article, let’s look at TD Bank’s financial growth trends and growth fundamentals to find out whether TD stock deserves a buy, sell, or hold rating in 2026.

TD Bank at a glance and recent stock performance

To put it simply, TD Bank operates across Canadian personal and commercial banking, U.S. retail banking, wealth management and insurance, and wholesale banking. Its stock currently trades at around $126.90 per share, giving it a market cap of roughly $212.8 billion. The bank also offers a decent annualized dividend yield of about 3.4%, which remains attractive for conservative, income-focused investors.

TD shares ended 2025 with solid 69% gains, reflecting renewed confidence as uncertainty around its restructuring and compliance issues eased and its earnings quality improved.

What’s driving the turnaround in investor sentiment

Several factors have helped change how the market views TD stock, which led to its strong rebound. One key driver has been progress in stabilizing its U.S. operations. The bank’s balance sheet restructuring efforts reduced its risk exposure, while its credit quality trends improved as provisions for credit losses declined.

Similarly, its wholesale banking is continuing to deliver record revenue, backed by strong trading and advisory activity. At the same time, TD’s wealth management and insurance business arm is benefiting from higher client assets and normalized insurance claims, boosting its earnings.

Together, these improvements have helped investors refocus on TD Bank’s core earnings power.

Financial growth trends tell a clearer story

In the fourth quarter of its fiscal 2025 (ended in October), TD reported adjusted earnings of $2.18 per share, compared with $1.72 per share a year ago. For the quarter, the bank’s adjusted net income rose 22% YoY (year-over-year) to $3.9 billion, driven by stronger fee income, lower credit losses in key portfolios, and solid performance across multiple business segments. For the full fiscal year, its adjusted earnings also increased to $8.37 per share, highlighting stable underlying growth.

More importantly, TD ended the year with a 14.7% Common Equity Tier 1 ratio, giving it a strong capital cushion and flexibility to support growth, dividends, and future investments.

Does TD Bank still make sense for 2026

All of this brings us back to what investors should do next. Notably, TD Bank is targeting 6% to 8% adjusted earnings growth in fiscal 2026, with a focus on disciplined cost management, digital efficiency, and deeper client relationships across Canada and the U.S. While compliance and remediation work in the U.S. continues, much of the financial impact is already reflected in recent results, reducing uncertainty going forward.

After a sharp run-up, TD stock may not look like a bargain in the short term. However, for long-term investors, the combination of its improving earnings quality, strong capital levels, diversified revenue streams, and a reliable dividend still supports a solid hold case, with buying on pullbacks.

The post TD Bank: Buy, Sell, or Hold in 2026? appeared first on The Motley Fool Canada.

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Fool contributor Jitendra Parashar has positions in Toronto-Dominion Bank. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.