After an impressive 18% gain in 2024, the TSX Composite Index has started 2025 with a bit of a stumble. It jumped out of the gate with a strong 3.3% gain in January but has since given back 1.9%, leaving the index up just 1.3% year to date.
For investors, it’s a classic case of “what now?” Do you sit on the sidelines and wait out the noise or lean in and pick your spots with precision? For me, the answer is clear. In a market like this, it’s less about broad buying and more about making smart, selective choices.
In this article, I’ll share the two TSX stocks I’d put my money on in 2025, regardless of near-term market noise. Interestingly, both stocks come from the banking sector, which I believe could outperform the broader market as falling interest rates create a better backdrop for lending and capital markets. Let’s dive in.
TD Bank stock
The first TSX stock I’d go for in 2025 is Toronto-Dominion Bank (TSX:TD). Based on a market cap of $150.4 billion, it is currently the second-largest bank in Canada. TD stock currently trades at $85.81 per share and offers an annualized dividend yield of around 4.9%, paid quarterly. After a tough 2024, the stock is quietly rebounding as it has gained over 14% in the past three months.
In the first quarter of its fiscal year 2025 (ended in January), TD Bank reported a 2.4% YoY (year-over-year) rise in its total revenue and a 1.5% increase in its adjusted quarterly net profit. This growth was mainly due to strong momentum in the bank’s Canadian personal and commercial banking business, which hit record revenue. Despite ongoing restructuring, its U.S. retail segment also showed progress.
While TD did face some serious headwinds last year due to issues related to its U.S. anti-money laundering (AML) compliance program, that chapter is largely behind it. The bank has since reached a resolution with regulators and is now focused on strengthening internal controls and improving its enterprise-wide AML systems.
With that in the rearview, TD is shifting gears toward growth again by investing in digital tools, expanding its wealth management arm, and enhancing operational efficiency — making it a top stock to buy in 2025.
Bank of Montreal stock
Bank of Montreal (TSX:BMO) could be another no-brainer pick in 2025. BMO is one of those banks that just quietly keeps delivering. The stock is currently trading at $140.10 per share, giving it a market cap of $101.8 billion. It also pays out a quarterly dividend, which works out to an attractive annualized yield of 4.5%. Over the past nine months, BMO stock has climbed more than 22%, and that momentum seems to be building again.
In its latest quarter ended January 2025, the bank posted a 17% YoY jump in its adjusted net profit to $2.29 billion while its revenue rose 18%. What really stands out, though, is how BMO is setting itself up for the future. Besides consistently investing in digital tools, the bank is growing its wealth and asset management business. With a strong balance sheet and diverse earnings streams, BMO feels like a stock you could confidently hold through whatever 2025 throws at us.