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. 

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

Top Articles

stock data
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 »

Elderly man giving a Christmas present to his wife
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 »

Gold bullion on a chart
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 sign on traditional europe building facade
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 sign on traditional europe building facade
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 »

A stock price graph showing growth over time
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 »

A golden egg in a nest
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

Two hands holding champagne glasses toasting each other with Paris in the background
Dividend Stocks

How to Turn Your Kid Into a Millionaire

| Christopher Liew, CFA

Financial discipline in children can start at an early age. When they reach the proper investing age, they can become…

Read more »

Couple relaxing on a beach in front of a sunset
Dividend Stocks

3 Super Stocks for RRSP Retirement Savers

| Andrew Button

If you're saving for retirement, stocks like Canadian National Railway (TSX:CNR)(NYSE:CNI) can be great buys

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Dividend Stocks

2 Cheap Stocks for a TFSA Retirement Fund

| Andrew Walker

Canadian Natural Resources Ltd. (TSX:CNQ) (NYSE:CNQ) and Canada's oldest bank deserve to be on your radar right now.

Read more »

edit Four girl friends withdrawing money from credit card at ATM
Dividend Stocks

Does This Canadian Bank Stock Have the Most Upside Potential Right Now?

| Victoria Hetherington

Still undervalued, Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) could have more growth ahead of it than its peers.

Read more »

question marks written reminders tickets
Dividend Stocks

Is It Too Early to Buy This Dividend Aristocrat Yielding Almost 4%?

| Matt Smith

Canadian Western Bank (TSX:CWB) is too cheap to ignore and is offering a juicy yield of almost 4%.

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

Canadian Imperial Bank of Commerce (TSX:CM): Too Cheap to Ignore

| Matt Smith

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is attractively valued and yielding a juicy 5.7%.

Read more »

Dice engraved with the words buy and sell
Bank Stocks

2 Top Blue Chip Stocks to Buy Before 2020

| Amy Legate-Wolfe

Looking for some buy and hold options? Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and this other stock are trading on the cheap.

Read more »

Happy Retirement” on a road
Dividend Stocks

This 1 Stock Is All You Need to Help Save for Retirement

| David Jagielski

Whatever your investment goal is, it's hard to go wrong with including a top bank stock like Bank of Montreal (TSX:BMO)(NYSE:BMO)…

Read more »

Senior couple at the lake having a picnic
Bank Stocks

Retirees: What Stocks to Avoid Approaching Retirement

| Debra Ray

Canada Goose Holdings Inc (TSX:GOOS)(NYSE:GOOS) announced earnings on Wednesday, and it still isn’t a better buy than these two bank…

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

Retirees: Check Out This Cheap High-Yield Stock for TFSA Income in 2020

| Andrew Walker

Bank of Nova Scotia (TSX:BNS) (NYSE:BNS) might be a top income pick heading into next year.

Read more »

Chalk outline of two arrows pointing in opposite directions
Dividend Stocks

RRSP Investors: Is CIBC (TSX:CM) Stock Too Cheap to Ignore?

| Andrew Walker

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) trades at a significant discount to its larger peers. Is the pullback overdone?

Read more »

edit Four girl friends withdrawing money from credit card at ATM
Dividend Stocks

3 High-Yield Dividend Stocks at Rock-Bottom Prices

| Andrew Button

If you're looking for high yield at low price, consider Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM)

Read more »

hand using ATM
Dividend Stocks

Should Royal Bank of Canada (TSX:RY) Stock Be on Your TFSA Buy List Today?

| Andrew Walker

Royal Bank of Canada (TSX:RY) (NYSE:RY) is the largest company on the TSX Index with market capitalization of $145 billion.…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

TFSA Tips and Tricks: 3 Ways to Max Out Your Account

| Christopher Liew, CFA

Any TFSA investor should follow the proper rules for managing the account. With Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) or Fortis…

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Bank Stocks

2 Stocks That Are Too Cheap to Ignore

| Ryan Vanzo

Cheap stocks are a great way to make a lot of money over the long term. If you're looking for…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Energy Stocks

Should You Buy Suncor Energy (TSX:SU) or Toronto-Dominion Bank (TSX:TD) Stock for Your TFSA Today?

| Andrew Walker

Suncor Energy Inc. (TSX:SU)(NYSE:SU) and Toronto Dominion Bank (TSX:TD)(NYSE:TD) are two of Canada's top companies. Is one a better bet…

Read more »

Bank sign on traditional europe building facade
Energy Stocks

Toronto-Dominion Bank (TSX:TD) Thinks Canadian Investors Are in Trouble

| Ryan Vanzo

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is concerned that the Canadian savings rate has fallen to its lowest level in more than a…

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Bank Stocks

2 Growth Stocks for the Next 20 Years

| Ryan Vanzo

Two growth stocks, Fairfax India Holdings Corp. (TSX:FIH.U) and Fairfax India Holdings Corp. (TSX:FIH.U), could add huge upside to your…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Stocks for Beginners

Everything You Need to Know About Starting a TFSA

| Amy Legate-Wolfe

New to investing? A TFSA is a great place to start.

Read more »

Piggy bank next to a financial report
Dividend Stocks

Investors: 2 Top “Forever Assets” to Stash in Your TFSA Today

| Nelson Smith

You can't beat TC Energy Corp (TSX:TRP)(NYSE:TRP) or Toronto-Dominion Bank (TSX:TD)(NYSE:TD) as long-term stalwarts for your portfolio.

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Energy Stocks

These Top Stocks May Be in Trouble Next Year

| Ryan Vanzo

If you're invested in top stocks like Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), Shopify Inc (TSX:SHOP)(NYSE:SHOP), or Baytex Energy Corp. (TSX:BTE)(NYSE:BTE),…

Read more »

Female hand holding piggy bank. Save money and financial investment
Bank Stocks

Q3 Earnings Preview: Canada’s Top Bank

| Ambrose O'Callaghan

Royal Bank of Canada (TSX:RY)(NYSE:RY) is set to release its third quarter results later this month.

Read more »

question marks written reminders tickets
Dividend Stocks

Better Buy: Toronto-Dominion Bank (TSX:TD) vs. Canadian Western Bank (TSX:CWB)

| Andrew Button

The Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is the fastest-growing big six bank, but this smaller bank may be even better

Read more »

Senior housing
Bank Stocks

The Number 1 Retirement Mistake Canadians Are Making Today

| Ryan Vanzo

Here's how to meet your retirement goals with reliable stocks like Fairfax Financial Holdings (TSX:FFH), Fairfax Africa Holdings (TSX:FAH.U), and…

Read more »

question marks written reminders tickets
Dividend Stocks

Should You Add CIBC (TSX:CM) Stock to a Dividend Portfolio?

| Victoria Hetherington

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is a cheap option for a stock investor looking for exposure to Canada's Big…

Read more »

edit Back view of hugging couple standing with real estate agent in front of house for sale
Dividend Stocks

2 Top Real Estate Stocks to Buy to Benefit From Canada’s Housing Boom

| Haris Anwar

Equitable Group Inc. (TSX:EQB) is one of the two top real-estate stocks that will continue to benefit from Canada;s housing…

Read more »

hand using ATM
Bank Stocks

Stash This 1 ETF in Your TFSA for Smooth Sailing to a Wealthy Retirement

| Joey Frenette

The BMO Low Volatility Equity ETF (TSX:ZLB) has your back in a bear market and it's also one of the…

Read more »

Arrowings ascending on a chalkboard
Bank Stocks

U.S. Fed Rate Cut Boosts TSX Earnings

| Debra Ray

CI Financial Corp (TSX:CIX) lowers risk in transition to advisory from asset management.

Read more »

hand using ATM
Bank Stocks

Why the Best Dividend Banking Stock Isn’t CIBC (TSX:CM)

| Amy Legate-Wolfe

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) might seem like the obvious choice as a dividend bank stock, but I'd recommend this…

Read more »

question marks written reminders tickets
Dividend Stocks

Could This 6.7% Yield Be a Better Buy Than TD Bank Stock (TSX:TD)?

| David Jagielski

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is a good and stable stock to hold for decades, but for dividend investors that want more of…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Ranking the Top 3 Bank Stocks at the 2019 Halfway Mark

| Christopher Liew, CFA

In order of performance, Toronto-Dominion Bank (TSX:TD)(NYSE:TD), Royal Bank of Canada (TSX:RY)(NYSE:RY), and Bank of Montreal (TSX:BMO)(NYSE:BMO) are the top…

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

The 2 Best Banks for Your Buck

| Joey Frenette

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is just one bank that investors should load up on.

Read more »

A close up image of Canadian $20 Dollar bills
Bank Stocks

This Financial Stock Is a Must-Own

| Mat Litalien, MBA

goeasy Ltd (TSX:GSY) posted record quarterly earnings. Its stock is reaching new highs, and it has quietly emerged as a…

Read more »

Modern buildings in business district
Dividend Stocks

Revealed: These 3 Dividend Kings Haven’t Missed a Payout in 100 Years

| Nelson Smith

Then you can't beat BCE Inc. (TSX:BCE)(NYSE:BCE), Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) or Bank of Montreal's (TSX:BMO)(NYSE:BMO) dividend histories.

Read more »

Increasing yield
Dividend Stocks

2 High-Yield Stocks for Dividend Investors

| Andrew Walker

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and a top telecom stock deserve to be on your radar today for very different…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

Retirees: Boost Your CPP Payments the Easy Way

| Christopher Liew, CFA

Retirees who are uncertain of receiving the maximum CPP benefits can invest in BCE Inc. (TSX:BCE)(NYSE:BCE), Canadian Imperial Bank of…

Read more »

Close up shot of senior couple holding hand. Loving couple sitting together and holding hands. Focus on hands.
Dividend Stocks

3 Top Stocks to Start Your Self-Directed Retirement Fund

| Andrew Walker

Here's why Telus Corporation (TSX:T)(NYSE:TU), a top bank, and a mining giant deserve to be on your radar today.

Read more »

A golden egg in a nest
Dividend Stocks

Baby Boomers: Build Your Nest Egg With 2 Titans

| Christopher Liew, CFA

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and TELUS Corporation (TSX:T)(NYSE:TU) are growth stocks that are aligned with the investing objectives of…

Read more »

hand using ATM
Dividend Stocks

A Cheap Dividend Stock for Your TFSA

| Joey Frenette

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is a baby that's being thrown out with the bathwater. Why I'd buy the stock…

Read more »

A brown bear sitting on a rock
Dividend Stocks

How to Get Your Portfolio Ready for a Bear Market

| Kay Ng

Never fear a bear market again by investing in Royal Bank of Canada (TSX:RY)(NYSE:RY) today!

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.