This dividend stock will beat the TSX every time

The stock market can go through cycles, but reliable dividend stocks tend to create their own rhythm over time. While growth stocks tend to grab most of the headlines during market rallies like the one in 2025, income stocks often do the real heavy lifting for entire market cycles. Investors focused on reliable cash flow typically look for companies that have already proven themselves in different economic conditions.

Toronto Dominion Bank (TSX:TD) fits that description well. It offers a great mix of dividend income, scale and long-term growth potential that many TSX investors look for when building a core portfolio. And TD’s recent performance only adds to that appeal. In this article, I’ll share why this top TSX dividend stock still looks well positioned to outperform the TSX year over year.

A top TSX dividend stock built for consistency

Before we explore other important fundamental factors, let’s take a quick look at TD Bank’s business model and stock performance. One of the country’s largest banks, it operates in the Canadian personal and commercial banking, U.S. retail banking, asset management and insurance, and wholesale banking segments. This broad design allows the bank to generate income from multiple sources rather than being dependent on a single market.

After rising 69% through 2025, TD stock is currently trading at $129.36 per share with a market cap of nearly $218.6 billion. By comparison, the TSX Composite benchmark rose 28.4% for the year. The bank also rewards its investors with quarterly dividends and currently offers an annualized dividend yield of around 3.3%, increasing its appeal as a top TSX dividend stock to buy for income-oriented investors.

Currently, this TSX dividend stock is trading just below its all-time high, showing sustained momentum rather than a short-lived spike. This solid performance clearly reflects growing investor confidence in TD’s ability to grow earnings while continuing to reward shareholders with dividends. For investors looking for a top TSX dividend stock, this combination of income and capital growth is hard to ignore. Now let’s take a closer look at the real numbers.

Earnings growth adds another layer of power

TD’s recent financial results help explain why the stock continues to hold up. In the fourth quarter of fiscal 2025 (ending in October), TD posted adjusted earnings of $2.18 per share, a sharp increase year-over-year (YoY).

Similarly, the bank’s adjusted net income for the quarter rose 22% year over year to $3.9 billion. Canadian personal and commercial banking operations posted record revenues, supported by higher loan and deposit volumes. TD’s US retail profits also improved as lower loan loss provisions and balance sheet restructuring began to deliver benefits.

Meanwhile, asset management and wholesale banking added further support with stronger fees and trading income.

A strategy aimed at long-term returns

These solid financials explain why TD appears well-positioned to continue to beat the TSX over time. The bank ended the 2025 financial year with a common equity tier 1 capital ratio of 14.7%, giving it a strong capital buffer.

In 2026, the bank expects to focus on increasing digital engagement, increasing fee revenue and controlling costs. These efforts could continue to support stable earnings growth while maintaining a reliable dividend. That’s why TD’s strong combination of dividend income, resilience and disciplined execution makes it one of the most attractive names on the stock exchange for investors looking for a top dividend stock on the TSX list in the new year.