Member Login
  1. Category
    2. /
  2. Investing
    3. /
  3. Bank Stocks
    4. /

Bank Stocks

What are bank stocks?

Bank stocks represent partial ownership in a financial institution that’s licensed to hold and loan money. Over time, bank stocks have been relatively safe investments, as they offer products and services that most people need.

How do you choose a good bank stock? 

1. Look at the bank’s profitability

First, you want to be sure the bank is even profitable. To do that, you can use the following metrics. 

  • Return on equity (ROE): this metric tells you how much profit a bank makes from its shareholder’s equity. The higher this metric, the more efficient a bank is using its stakeholder’s money. 
  • Return on assets (ROA): the ROA tells you the overall profit a bank makes in relation to its assets. The higher the ROA, the more profit a bank makes from its assets. 
  • Efficiency ratio: the efficiency ratio tells you how much revenue a bank uses towards its operating costs. The lower the efficiency ratio, the more revenue a bank theoretically has. 

2. Assess the bank’s risks 

One of the biggest risks a bank has is losing money on an outstanding loan. As with profitability, a couple metrics could help you see how much banks are losing.

  • Nonperforming loans ratio (NPL): Nonperforming loans are loans that are at least 90 days past their due date. A bank with a low percentage of NPL (2% is a good ratio) is doing fairly well collecting loan repayments from its customers. 
  • Net charge-offs: a net charge-off is a bank’s declaration stating that a loan hasn’t been paid and is unlikely to be paid. As with NPLs, the less net charge-offs a bank has, the less money it’s losing on outstanding loans. 

3.  Check back here for our top picks 

Finally, we’ll keep this page updated with our staff writer’s reviews and assessment of Canada’s bank stocks. Our writers often use these metrics to help investors see which bank stocks are doing well and which are doing poorly. 

[KevelPitch adtype=151]

Check back here for the most up to date information about bank stocks in Canada.

Top Articles

Bank Stocks

Is BNS Stock a Buy in January 2023?

| Andrew Walker

Bank of Nova Scotia stocks looks cheap right now. Is this a good time to buy or should investors wait?

Read more »

Bank Stocks

TSFA or RRSP – Better Place to Stash Cash in 2023?

| Amy Legate-Wolfe

If a recession hits us hard in 2023, you'll want the ability to take out cash if you need it.…

Read more »

Dividend Stocks

TFSA Investors: Why You Should Invest Your Room ASAP With These 3 Stocks

| Adam Othman

Choosing the right TFSA stocks for your portfolio might take some time. But with the right choices, you can stick…

Read more »

Bank Stocks

Is Now the Right Time to Buy Canadian Bank Stocks?

| Andrew Button

Some bank stocks, like Toronto-Dominion Bank (TSX:TD) are doing well; others, not so much. Is it time to buy bank…

Read more »

Bank Stocks

2 Bank Stocks to Load Up on in a Recession

| Chris MacDonald

Here are two top Canadian bank stocks investors may want to consider, particularly as we potentially head into a recession.

Read more »

Bank Stocks

Better Buy: RBC Stock or the Entire TSX?

| Brian Paradza, CFA

Buying Royal Bank of Canada (TSX:RY) stock lets you invest like Warren Buffett does, but investing in the entire TSX…

Read more »

Bank Stocks

CRA: 3 Big Changes Coming to 2023 Tax Breaks

| Aditya Raghunath

Use the tax breaks to lower your tax bill and purchase blue-chip TSX stocks such as Royal Bank of Canada.

Read more »

Bank Stocks

The 1 TSX Stock I’d Go All-In On

| Andrew Button

TD Bank (TSX:TD)(NYSE:TD) stock is out of favour now but could come back in a big way.

Read more »

Recent Bank Stocks News

Dividend Stocks

Dividend Aristocrat Stocks to Buy Right Now

| Mat Litalien, MBA

Now is the time to add Canadian Dividend Aristocrat stocks such as the Bank of Montreal (TSX:BMO), BCE (TSX:BCE) and…

Read more »

Dividend Stocks

OAS Clawback: 2 Ways to Avoid Getting Your OAS Taken Away

| Jason Hoang

Early RRSP withdrawals, along with the smart use of TFSA with a growth stock, can protect you from the OAS…

Read more »

Dividend Stocks

Canada Revenue Agency: Tax Implications of 2 Different Account Types

| Adam Othman

How properly allocating your investments between the registered and non-registered account can help you with long-term and short-term goals.

Read more »

Dividend Stocks

2 Well-Run Banks Are Your Insurance in a Long-Lasting Recession

| Christopher Liew, CFA

A global recession longer than the previous ones is possible, unless Governments find the cure to the coronavirus. Investors can…

Read more »

Bank Stocks

Pensioners: How to Earn an Extra $3,822.50 Per Year and Avoid OAS Clawbacks

| Andrew Walker

There is a way for Canadian retirees to boost income and protect OAS payments.

Read more »

Bank Stocks

TFSA Investors: How to Use the Market Crash to Retire Wealthy

| Andrew Walker

Top Canadian stocks now appear oversold.

Read more »

Dividend Stocks

69% of RRSP Investors Are Doing This Right, According to BMO (TSX:BMO)

| Adam Othman

The earlier you start saving and building your wealth for retirement, the better your chances for cozy golden years. That’s…

Read more »

Bank Stocks

Home Capital: What a Run — and Can It Continue?

| Chris MacDonald

What is on the horizon for Canada's alternative lender Home Capital Group (TSX:HCG)?

Read more »

Dividend Stocks

CPP Pension: You’re Not 100% Ready for Life After Work Because of 1 Flaw

| Christopher Liew, CFA

Relying on the OAS and CPP pensions is risky and a major flaw of would-be retirees. To ensure a comfortable…

Read more »

Dividend Stocks

Don’t Panic: Ignore the Headlines and Invest Like Warren Buffett

| Matt Smith

Buy attractively valued National Bank of Canada (TSX:NA) today and lock in a 5% dividend yield.

Read more »

Dividend Stocks

TFSA Investors: Market Crash Makes Canadian Bank Stocks Attractive

| Haris Anwar

Falling stock prices of Canadian banks have made them extremely attractive for TFSA investors.

Read more »

Dividend Stocks

If You Don’t Buy TD Bank (TSX:TD) Today, You’ll Kick Yourself Later

| Nelson Smith

Investors who aren't loading up on TD Bank (TSX:TD)(NYSE:TD) shares today will likely regret this decision in the future. So…

Read more »

Bank Stocks

Market Crash: Should You Buy CIBC (TSX:CM) Stock for the 6.8% Yield?

| Andrew Walker

An amazing yield on a top dividend stock. Is this the best time to buy CIBC (TSX:CM) shares?

Read more »

Tech Stocks

Dividend Investors: 3 High-Yield TSX Stocks to Buy After the Market Crash

| Aditya Raghunath

The market crash presents investors an opportunity to buy stocks at attractive dividend yields.

Read more »

Dividend Stocks

Why the Oil Price War Won’t Last: 1 Dividend Stock to Buy for Massive Gains

| Kay Ng

Forget energy stocks! Buy this safe dividend stock instead for huge gains. It offers a 5% yield and has much…

Read more »

Dividend Stocks

3 Bank Stocks to Buy if They Get Hammered Any Lower

| Jason Hoang

Bank stocks on the TSX are constantly dipping, carving out an opportunity for long-term investors to capitalize on the situation…

Read more »

Dividend Stocks

Lock in a 5.16% Yield With TD Bank’s (TSX:TD) Stock

| Mat Litalien, MBA

Now is the time to buy Toronto-Dominion Bank's (TSX:TD) stock. TD Bank's dividend yield is now at levels not seen…

Read more »

Dividend Stocks

Canada Revenue Agency: Pay Fewer Taxes Due to This 2020 CRA Update

| Adam Othman

Leverage this significant CRA update, so you have to pay fewer taxes and invest in the Scotiabank stock.

Read more »

Dividend Stocks

How to Generate $1,000 a Month in Dividends From Shares

| Kay Ng

Get $1,000 a month in dividends from these dividend stocks that are on sale. They include TD Bank (TSX:TD)(NYSE:TD) stock,…

Read more »

Dividend Stocks

Dividend Investors: These 3 52-Week Low Stocks Are Screaming Buys Today

| Nelson Smith

Bank of Montreal (TSX:BMO)(NYSE:BMO), Pembina Pipeline (TSX:PPL) and Canadian National Railway (TSX:CNR)(NYSE:CNI) are all at a fresh 52-week low. Time…

Read more »

Dividend Stocks

CPP Pension Users: 3 Horrifying Truths About Retirement

| Christopher Liew, CFA

The more you learn about the harsh truths about retirement, the better you can prepare. Start the preparing by saving…

Read more »

Dividend Stocks

Income Investors: 2 Oversold Dividend-Growth Stocks for a TFSA Pension

| Andrew Walker

Top dividend-growth stocks on sale.

Read more »

Dividend Stocks

Sitting on a Cash Pile? Now’s the Time to Buy These 2 Stocks

| Christopher Liew, CFA

One rule of wealth is that money begets money. Saving but keeping cash idle will not make you rich. Your…

Read more »

Dividend Stocks

Market Crash: A Top Contrarian Stock for Canadian Investors to Buy Today

| Matt Smith

By attractively valued Bank of Nova Sccotia (TSX:BNS)(NYSE:BNS) today and lock-in a 6% yield.

Read more »

Dividend Stocks

2 Stocks That Just Hung Out a Giant FOR SALE Sign

| Adam Othman

The CIBC stock and Suncor stock are attractively valued yet high-quality assets you might want to consider buying on the…

Read more »

Bank Stocks

Canadian Investors: 1 High-Yielding, Dirt Cheap Stock

| Jared Seguin

With the recent market plummet, Canadian investors can secure a sizeable dividend with shares of BMO (TSX:BMO)(NYSE:BMO).

Read more »

Energy Stocks

Market Crash 2020: TSX Stocks Suffer Worst Decline Since 1987

| Aditya Raghunath

Why did the Canadian equity markets fall by 10.7% yesterday?

Read more »

Dividend Stocks

TFSA Investors: 3 Common Mistakes to Avoid in 2020

| Aditya Raghunath

TFSA investors need to avoid overcontributing to their account. They also need to understand the impact of capital gains and…

Read more »

Bank Stocks

Canadian Bank Stocks Are On Sale: Which Dividend Stock is the Safest?

| Kay Ng

Market corrections can be nerve-racking, but you should stay calm if you're invested in Canadian bank stocks, especially if you're…

Read more »

Dividend Stocks

TFSA Contribution 2020: 2 Dividend Stocks I’m Buying With My Extra $6,000

| Nelson Smith

I just put my TFSA contribution to work in Royal Bank (TSX:RY)(NYSE:RY) and Polaris Infrastructure (TSX:PIF). Here's why you should…

Read more »

Dividend Stocks

Retiree Investors: 2 Cheap Dividend Stocks to Boost TFSA Income

| Andrew Walker

The market sell-off is producing great opportunities for TFSA income investors.

Read more »

Dividend Stocks

Why Toronto-Dominion Bank (TD) Stock Price Fell 5.6% in February

| Karen Thomas, MSc, CFA

TD Bank stock (TD) price falls on general market weakness, concerns regarding economic growth and rising credit losses. Look for…

Read more »

Bank Stocks

Market Crash: A Top Canadian Dividend Stock for Contrarian TFSA Investors

| Andrew Walker

Top Canadian dividend stocks are becoming oversold. Is this the right time for contrarian investors to buy?

Read more »

Dividend Stocks

Buy These 2 Stocks on the TSX Market Dip

| Adam Othman

The Canada Natural Resources stock and Toronto-Dominion stock could be excellent buys on the dip right now amid recession fears.

Read more »

Dividend Stocks

Retirement Planner: Get These 3 Things Done Before You Retire

| Christopher Liew, CFA

Retirement planning requires early and diligent preparation. Also, boosting cash reserves with the Scotiabank stock and Capital Power stock should…

Read more »

Dividend Stocks

How to Reach $800,000 in Your TFSA by Investing Just $500 a Month

| Kay Ng

Bank of Montreal (TSX:BMO)(NYSE:BMO) stock offers an attractive yield of 5% at a discounted valuation. It’s time to buy on…

Read more »

Dividend Stocks

TSX Stock Investors: See the 1 Sector to Sell in March!

| Victoria Hetherington

After trimming one sector from portfolios, TSX stock investors should consider buying Manulife Financial Corp. (TSX:MFC)(NYSE:MFC).

Read more »

Dividend Stocks

My Stock Portfolio Game Plan in This Market Correction

| Kay Ng

Have a stock investing game plan so you can better handle and take advantage of market corrections and crashes. Here's…

Read more »

Dividend Stocks

Become a Dividend Stock Millionaire Faster From a Market Crash

| Kay Ng

Market corrections and crashes are opportunities for you to build your wealth faster over the long run. Consider TD Bank…

Read more »

Dividend Stocks

Updated: Ranking Canada’s Best Bank Stocks for the Rest of 2020

| Nelson Smith

Both Royal Bank (TSX:RY)(NYSE:RY) and TD Bank (TSX:TD)(NYSE:TD) look to be screaming buys over both the short and long-term.

Read more »

Frequently Asked Questions

Why invest in bank stocks?

Quality bank stocks have a strong history of generating profits and managing crises, making them a great investment.

In addition to their strong performance, many of Canada’s top banks pay dividends, with payouts that increase over time. For Canadian investors looking to pocket a little extra from their stocks, dividends can help you buy more shares or more cash.

Finally, bank stocks can help diversify your investing portfolio. If you already have stocks in other sectors (mining, technology, energy), bank stocks could add much needed stability, as well as expose you to the gains in another sector.