Bullish indicating open at $55-$60, IPO prices at $37
Investing.com -- Shares of Toronto Dominion Bank (TSX: NYSE:TD) (NYSE: TD) climbed 3.3% today after the bank announced its plans to initiate a stock buyback following the sale of its equity investment in Charles Schwab (NYSE: NYSE:SCHW). The move comes as part of TD’s strategic review to optimize capital allocation and focus on growth opportunities.
TD’s decision to exit its Schwab investment was influenced by the substantial return on the shares acquired in 2020, as stated by Raymond (NSE:RYMD) Chun, Group President and CEO of TD Bank Group. Chun expressed confidence in the bank’s growth prospects and its long-term potential. He elaborated on the intended use of the proceeds, with C$8 billion earmarked for the repurchase of TD stock and the remainder to be invested in the business to support customers and clients, enhance performance, and foster organic growth.
The stock buyback plan involves the repurchase for cancellation of up to 100 million of its common shares, which represents about 5.7% of its issued and outstanding common shares as of October 31, 2024. The repurchase is conditional upon the successful completion of its Schwab share sale, regulatory approvals, and acceptance of the notice of intention by the Toronto Stock Exchange.
The buyback is expected to be executed through the facilities of the TSX and other designated exchanges and markets in Canada, as well as through the New York Stock Exchange and other designated exchanges and markets in the U.S. The bank will comply with applicable securities laws and regulatory requirements, and the repurchase price will reflect the market price at the time of acquisition.
As of the end of October 2024, TD Bank reported strong capital ratios, with Common Equity Tier 1, Tier 1, Total (EPA:TTEF) Capital, and Leverage ratios at 13.11%, 14.78%, 16.76%, and 4.19%, respectively. This financial robustness supports the bank’s capacity to undertake the proposed share buyback.
Today’s stock movement reflects the market’s positive reception to TD’s strategic actions and its commitment to returning value to shareholders while investing in its core business for sustained growth.
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