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

Energy Stocks

3 Stocks That Will Pay You More Dividends Than RBC (TSX:RY)

| Adam Othman

TC Energy stock, Emera stock, and Exchange Income stock are three Dividend Aristocrats with yields more attractive than Royal Bank…

Read more »

close-up photo of investor Warren Buffett
Bank Stocks

Warren Buffett Exited This Canadian Growth Stock in 2018

| Aditya Raghunath

Home Capital Group stock has gained over 100% since Warren Buffett exited the stock. Despite its attractive valuation, investors can…

Read more »

Bank Stocks

TFSA Pension: 2 Top Canadian Dividend Stocks to Help Couples Earn $434 in Monthly Tax-Free Income

| Andrew Walker

Here's how retirees can put more money in their pockets.

Read more »

Dividend Stocks

Alert: This Canadian Bank Killed It in 2019!

| Joey Frenette

National Bank of Canada (TSX:NA) is a king among men in the fourth quarter. Here's why investors should take notice.

Read more »

Dividend Stocks

2 Dividend Stocks Will Cut You a Fat Cheque Every 3 Months

| Christopher Liew, CFA

CIBC stock and First National stock can provide a significant boost to your earnings. You can incorporate the quarterly dividend…

Read more »

Dividend Stocks

If You Don’t Buy Royal Bank (TSX:RY) Shares Today, You’ll Be Kicking Yourself Later

| Nelson Smith

Royal Bank of Canada (TSX:RY)(NYSE:RY) is poised to be a stellar investment for decades to come. So, why don't you…

Read more »

Dividend Stocks

Retirees: How to Use Options to Supercharge Your Passive Income

| Joey Frenette

Why the BMO Covered Call Canadian Banks ETF (TSX:ZWB) can help retirees boost their income through the sale of call…

Read more »

Bank Stocks

Is goeasy (TSX:GSY) a Good Pick for 2020?

| Aditya Raghunath

goeasy stock has gained over 80% in 2019. Is it still attractive for 2020?

Read more »

Dividend Stocks

Baby Boomers: Thinking of Selling Your House? Read This First

| Christopher Liew, CFA

Selling your house to finance retirement is a hard and emotional decision. But if it’s the last resort, invest available…

Read more »

Dividend Stocks

Master Your TFSA With These 2 Pro Tips

| Adam Othman

From understanding the impact of losses on your contribution to the importance of owing stocks like Toronto Dominion, here’s how…

Read more »

Dividend Stocks

TFSA Investors: 3 Great Dividend Stocks Yielding up to 8.8%

| Mat Litalien, MBA

Stocks such as Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) offer sustainable yields that provide investors with above-average income.

Read more »

Bank Stocks

ALERT! 2 Top Bank Stocks Just Set Off a Buy Signal

| Ambrose O'Callaghan

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Royal Bank of Canada (TSX:RY)(NYSE:RY) stocks look oversold right now.

Read more »

Dividend Stocks

TFSA Investor Alert: How to Turn $20,000 Into $250,000 in 20 Years

| Andrew Walker

Buy-and-hold investors can take advantage of a TFSA to build a substantial retirement fund.

Read more »

Dividend Stocks

Buy This Top Bank Stock on Weakness as Uncertainty Mounts

| Victoria Hetherington

For investors seeking quality dividend stocks, Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is a strong play on weakness.

Read more »

Tech Stocks

How to Transform $5,000 Into $30,000!

| Ryan Vanzo

If you want to turn $5,000 into $30,000, you need to understand the factors that cause money to compound. Only…

Read more »

Dividend Stocks

DANGER: This Mistake Could Get Your TFSA Taxed at 50%!

| Andrew Button

To avoid getting taxed for holding prohibited TFSA investments, hold stocks like Royal Bank of Canada (TSX:RY)(NYSE:RY) instead

Read more »

Dividend Stocks

TFSA Income: Should Bank of Montreal Stock (TSX:BMO) Be in Your Portfolio?

| Haris Anwar

Two factors that make Bank of Montreal (TSX:BMO)(NYSE:BMO) stock a good fit for your TFSA.

Read more »

Bank Stocks

RRSP Investors: Is TD (TSX:TD) Stock a Buy Today?

| Andrew Walker

The Canadian banks just turned in a mixed bag of earnings for fiscal Q4 2019. Time to buy or bail…

Read more »

Dividend Stocks

3 Amazing Value Stocks for 2020

| Brian Pacampara, CFA

This group of bargains, including Nutrien (TSX:NTR)(NYSE:NTR), can help build your wealth the prudent way.

Read more »

Dividend Stocks

2 High-Yield Dividend Stocks to Buy and Never, Ever Sell

| Adam Othman

Fortis and Canadian Imperial are both buy-and-hold stocks you should add to your portfolio and forget about them while they…

Read more »

Dividend Stocks

3 Reasons Your U.S.-Linked Stocks Will (Probably) Be Okay

| Victoria Hetherington

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) dipped this week, but here’s why its growth in the U.S. looks safe for the time being.

Read more »

Dividend Stocks

RRSP Investors: 2 Oversold Dividend Stocks to Consider for 2020

| Andrew Walker

Canadian savers are constantly searching for ways to boost the size of their retirement fund.

Read more »

Bank Stocks

TFSA Investors: 1 Mortgage Stock to Consider for Your Retirement Portfolio

| Aditya Raghunath

Here's why Genworth MI Canada stock is a solid bet for long-term investors.

Read more »

Dividend Stocks

Nail Down Income of $1,380 in 2020 With Just an Average TFSA — Here’s How

| Brian Pacampara, CFA

This trio of top dividend plays, including Husky Energy (TSX:HSE), can provide the fat income you need now.

Read more »

Bank Stocks

40% of Canadian Millennials Are Gig Economy Workers

| Christopher Liew, CFA

Millennials working in the gig economy can use their savings to invest in the Royal Bank of Canada stock and…

Read more »

Dividend Stocks

TD Bank (TSX:TD) Stock Slides: Buy the Dip?

| Andrew Button

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock has been tumbling lately. Is it time to buy the dip?

Read more »

Dividend Stocks

Income Investors: Buy These Dividend Stocks on Holiday Sale!

| Kay Ng

Do some Christmas shopping for yourself. Buy Bank of Montreal (TSX:BMO)(NYSE:BMO) and Pembina Pipeline (TSX:PPL)(NYSE:PBA) for passive income and total…

Read more »

Dividend Stocks

Why January Might Be the Best Time to Buy Stocks

| David Jagielski

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) could be a steal of a deal very soon.

Read more »

Dividend Stocks

Long-Term Investors: The Number 1 Mistake You’ll Want to Avoid in 2020

| Daniel Da Costa

Finding companies to add to your portfolio that you have confidence in for the long run will be key in…

Read more »

Dividend Stocks

2 Dividend Aristocrats to Boost Your Passive Income

| Daniel Da Costa

If you want a stock that will grow its income distributions alongside its share price, check out the Dividend Aristocrats,…

Read more »

Dividend Stocks

These Are the Best Stocks to Buy for Your TFSA

| Haris Anwar

Stocks such as Royal Bank of Canada (TSX:RY)(NYSE:RY) offer the best way to max out your TFSA limit and earn…

Read more »

Dividend Stocks

This World-Class Bank Stock Is on Sale This Week

| Victoria Hetherington

Is Toronto-Dominion Bank (TSX:TD)(NYSE:TD) a top bank stock to buy the dip, or are there safer dividend plays out there?

Read more »

Bank Stocks

Retirees: This Financial Stock Will Make a Great Addition to Your Retirement Portfolio

| Aditya Raghunath

Sun Life Financial is set to benefit from its expansion in Asian markets. Is it a good time to own…

Read more »

Dividend Stocks

Is Carnage Coming to Canadian Bank Stocks in 2020?

| Karen Thomas, MSc, CFA

Even the leading Canadian bank stock, Toronto-Dominion Bank (TSX:TD) (NYSE:TD), is feeling the pressure with words of caution for a…

Read more »

Bank Stocks

Millennials: 3 Reasons Your Money Isn’t as Hopeless as You Think

| Christopher Liew, CFA

Millenials are bombarded with bad news about the economy. But by making good investments like RBC stock early, you can…

Read more »

Bank Stocks

Canada Revenue Agency: 2 Stunning RRSP Stats

| Ambrose O'Callaghan

Canadian RRSP contribution trends are somewhat troubling. Those who are active in their RRSP should consider stocks like Bank of…

Read more »

Dividend Stocks

Royal Bank of Canada (TSX:RY) Disappoints and Bank of Nova Scotia (TSX:BNS) Impresses

| Mat Litalien, MBA

The final results are in and Canada's Big Banks end the year on a low note with mixed fourth quarter…

Read more »

Bank Stocks

TFSA Users: Royal Bank (TSX:RY) vs. TD Bank (TSX:TD) in 2020

| Ambrose O'Callaghan

Royal Bank of Canada (TSX:RY)(NYSE:RY) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) released disappointing earnings to close out the year.

Read more »

Dividend Stocks

Buy Canadian Imperial Bank of Commerce (TSX:CM) Today

| Matt Smith

Buy Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) today and lock-in a juicy 5% yield.

Read more »

Dividend Stocks

TFSA Income: 2 Top Dividend Stocks to Own in 2020

| Andrew Walker

The stock market might be in for a wild ride next year. Which dividend stocks are attractive TFSA income picks…

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.