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

3 Reasons Why Scotiabank (TSX:BNS) Is the Best Big Bank to Buy in 2020

| Adam Othman

Find out why Bank of Nova Scotia stock is a must-have for your investment portfolio as you enter the New…

Read more »

Dividend Stocks

WARNING: A Housing Market Crash Could Tank These 3 Canadian Stocks!

| Andrew Button

If you're worried about a potential housing market crash, you'd be wise to avoid Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM)…

Read more »

Dividend Stocks

TFSA Investors: Should You Buy TD Bank (TSX:TD) Stock Today?

| Andrew Walker

The TFSA is a great tool for Canadian investors to build a retirement funds and an income portfolios.

Read more »

Dividend Stocks

The $100 Billion Time Bomb That Could Sink Canadian Bank Stocks!

| Andrew Button

Faced with rising consumer debt and declining credit quality, banks like Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) are in a…

Read more »

Dividend Stocks

TFSA Income Investors: 2 Reliable Dividend Stocks to Own for 30 Years

| Andrew Walker

Income investors want to own stocks that won't keep them up at night.

Read more »

Dividend Stocks

Canada Revenue Agency: Avoid the 15% OAS Clawback With This Simple Trick

| Christopher Liew, CFA

The OAS clawback is a nagging issue. The effective solution to avoid it is by earning tax-free income from the…

Read more »

Dividend Stocks

RRSP Wealth: 2 Cheap Stocks to Own for 25 Years

| Andrew Walker

Deals are still available for self-directed RRSP investors.

Read more »

Dividend Stocks

Why the Canadian Imperial Bank of Canada (TSX:CM) Stock Price Fell 6.4% in December

| Karen Thomas, MSc, CFA

Canadian Imperial Bank of Commerce (TSX:CM) (NYSE:CM) falls in December as fourth quarter results disappoint amidst a weakening Canadian banking…

Read more »

Dividend Stocks

1 High-Yield Dividend Stock Has Everything You Need to Get Rich

| Christopher Liew, CFA

Canadian Imperial Bank of Commerce stock pays the highest dividend among the Big Five Bank stocks. You can get rich…

Read more »

Dividend Stocks

Revealed: I Just Bought This Stock for My RRSP

| Nelson Smith

You won't find many financial institutions finer than TD Bank (TSX:TD)(NYSE:TD). That's why this stud bank has found a home…

Read more »

Dividend Stocks

Why Now Is the Time to Get Greedy With the Canadian Banks

| Joey Frenette

Why Scotiabank (TSX:BNS)(NYSE:BNS) could be your ticket to financial freedom amid unfavourable macro conditions.

Read more »

Dividend Stocks

Retirees: How to Generate an Extra $735 in Monthly Income and Protect Your OAS Pension

| Andrew Walker

Here's how Canadian pensioners can boost income without triggering OAS clawbacks.

Read more »

Dividend Stocks

Forget Gold! Buy This 5%-Yield Dividend Stock Instead

| Kay Ng

Don’t be tricked by the short-term spike in gold prices. Buy Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) stock instead.

Read more »

Dividend Stocks

3 Canadian Bank Stocks to Watch in 2020

| Andrew Button

After having one of its biggest subsidiaries bought out, the Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is one to keep an eye on…

Read more »

Dividend Stocks

Forget Lotto Max: Here’s How to Retire a Millionaire

| Andrew Walker

This investment strategy offers better odds of retiring rich.

Read more »

Dividend Stocks

Why the Toronto-Dominion Bank (TD) Stock Price Fell 4.9% in December

| Karen Thomas, MSc, CFA

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) just reported disappointing Q4 results. Expect continued short-term pain, but remain focused on the long-term and ready…

Read more »

Dividend Stocks

Canada Revenue Agency: How Pensioners Can Earn an Extra $460 in Tax-Free Monthly Income

| Andrew Walker

Canadian retirees are searching for ways to earn additional tax-free income.

Read more »

Energy Stocks

3 Major Investor Takeaways as Uncertainty Dominates the Markets

| Victoria Hetherington

Gold is a buy as risk ramps up, with stocks like Wesdome Gold Mines Ltd. (TSX:WDO) looking attractive.

Read more »

Dividend Stocks

Why Royal Bank of Canada (TSX:RY) Is a Top Stock for 2020!

| Joey Frenette

At today's multiples, Royal Bank of Canada (TSX:RY)(NYSE:RY) may be the best dividend pick for your next $6,000 TFSA contribution.

Read more »

Dividend Stocks

Identifying Opportunities in Latin America for 2020

| Matt Smith

Buy Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) today and benefit from Latin America's return to growth.

Read more »

Dividend Stocks

Retirees: Make Your Money Last Longer With These 3 Dividend Stocks

| Christopher Liew, CFA

The Bank of Montreal stock, Canadian Utilities stock, and Algonquin Power stock are the proven safety nets of retirees needing…

Read more »

Dividend Stocks

Turn Your $69,500 TFSA Into $500,000 the Easy Way

| Adam Othman

Learn how to utilize the maximum contribution room in your TFSA to reach your financial goals in the easiest way…

Read more »

Dividend Stocks

Ranking the Best Canadian Banks to Buy in 2020 (and Beyond!)

| Nelson Smith

2020 looks to be a great year for Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), TD Bank (TSX:TD)(NYSE:TD) and CIBC (TSX:CM)(NYSE:CM).

Read more »

Dividend Stocks

Prep Your RRSP, Because 1 Major Mistake Can Be Penalized by the CRA

| Christopher Liew, CFA

The RRSP is an ideal for retirees. Resist making early withdrawals to avoid tax penalties. Instead, grow your retirement savings…

Read more »

Dividend Stocks

50% of Canadian Millennials Are Making This Serious TFSA Mistake

| Adam Othman

Avoid making this mistake that half of Canadian millennials are making and consider investing in stocks like Royal Bank to…

Read more »

Dividend Stocks

2 Cheap but Excellent Dividend Stocks to Buy for Your TFSA

| Mat Litalien, MBA

Despite hitting new highs, there is still value to be found in the markets. Case in point - The Bank…

Read more »

Bank Stocks

TFSA Users: Avoid the Same Massive Mistake as 43% of Canadians

| Christopher Liew, CFA

Are you making a huge TFSA error, like 43% of Canadians? Don't just save in your TFSA, but invest in…

Read more »

Bank Stocks

How Much Income Will You Have in Retirement? 3 Easy Steps to Get You Started

| Christopher Liew, CFA

Retirement can be complicated, and figuring out your income sources can be an annoyance. Look at your CPP, work pension,…

Read more »

Dividend Stocks

Retirees: Use These 3 Stocks to Supercharge Your CPP Pension

| Nelson Smith

Slate Retail REIT (TSX:SRT.UN), Rogers Sugar (TSX:RSI), and Laurentian Bank (TSX:LB) can really help supplement a meagre CPP.

Read more »

Bank Stocks

Canadian Parents: The RESP Guarantees $7,200 “Free” Money for Your Children

| Christopher Liew, CFA

The RESP is the best way to save for your child's education. Invest in TD stock to unlock the power…

Read more »

Dividend Stocks

Journey to Wealth: 3 Dividend Stocks for Retirement Planners

| Christopher Liew, CFA

Anyone looking ahead to retirement can start the journey to wealth by investing in the Bank of Montreal stock, BCE…

Read more »

Bank Stocks

RRSP Investors: 2 Canadian Stocks to Diversify a Self-Directed Pension Fund

| Andrew Walker

RRSP investors can get global exposure through top-quality Canadian stocks. Here's how.

Read more »

Dividend Stocks

TFSA Investors: Can goeasy (TSX:GSY) Stock Double Your Money Again in 2020?

| Mat Litalien, MBA

Last January, goeasy Ltd (TSX:GSY) stock was my top pick for the month. It has almost doubled and is due…

Read more »

Dividend Stocks

1 TFSA High-Yield Dividend Stock to Buy and Never, Ever Sell

| Adam Othman

Bank of Montreal stock might deserve a permanent place in your investment portfolio as one of the buy-and-forget stocks.

Read more »

Dividend Stocks

Why You’d Be Smart to Buy This Canadian Bank Stock in 2020

| Kay Ng

You don't need to overthink things to get great investing returns! Here's why you'd be smart to buy Scotiabank (TSX:BNS)(NYSE:BNS)…

Read more »

Dividend Stocks

Want to Retire Soon? Then Follow This 3-Step Checklist

| Christopher Liew, CFA

You can’t decide on retirement unless you pass the readiness checklist. Also, have investments in dividend payers Toronto-Dominion stock and…

Read more »

Tech Stocks

2 Stocks to Help You Build TFSA Wealth

| Ambrose O'Callaghan

Investors looking to build TFSA wealth in the 2020s should look to stocks like Kinaxis Inc. (TSX:KXS) and Bank of…

Read more »

Dividend Stocks

Retirees: How to Earn an Extra $336 Per Month and Avoid OAS Clawbacks by the Canada Revenue Agency

| Andrew Walker

How to protect your OAS pension while earning extra retirement income.

Read more »

Dividend Stocks

Buy This Underrated Canadian Bank for CRA-Proof Passive Income

| Joey Frenette

National Bank of Canada (TSX:NA) ought to be the next buy for your TFSA contribution.

Read more »

Dividend Stocks

CPP Pension Users: 2 Reasons to Delay Your CPP Until 70

| Christopher Liew, CFA

Bank of Nova Scotia stock and TORC stock can provide the supplementary income if you decide to defer your CPP…

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.