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

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

2 Dividend Heavyweights to Add to Your TFSA Freedom Fund

| Nelson Smith

Turn your TFSA into a perpetual income machine by loading up on great stocks like Telus Corporation (TSX:T)(NYSE:TU) and Toronto-Dominion…

Read more »

Canadian Dollars
Bank Stocks

Build Permanent Wealth With These 3 Stocks

| Ryan Vanzo

Discover why Manulife Financial Corporation (TSX:MFC)(NYSE:MFC), Fairfax Financial Holdings Ltd (TSX:FFH), and Canadian Pacific Railway Ltd (TSX:CP)(NYSE:CP) are your best…

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Dividend Stocks

3 Reasons TD Bank (TSX:TD) Will Dominate Online Banking

| Andrew Button

With a wildly popular mobile app, The Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is set to dominate online banking

Read more »

Businessmen teamwork brainstorming meeting.
Dividend Stocks

Millennials: How Much Passive Income Do You Need to Generate From Your TFSA?

| Amy Legate-Wolfe

It really is harder for millennials, but luckily Royal Bank of Canada (TSX:RY)(NYSE:RY), Suncor Energy Inc. (TSX:SU)(NYSE:SU) and one other stock offer…

Read more »

Senior couple at the lake having a picnic
Dividend Stocks

RRSP and TFSA Investors: 2 Top Dividend Stock to Help You Retire Rich

| Andrew Walker

Royal Bank of Canada (TSX:RY)(NYSE:RY) and a top Canadian telecom stock deserve to be on your TFSA and RRSP radars…

Read more »

hand using ATM
Stocks for Beginners

How This Banking Stock Can Help Your $6,000 TFSA Grow to $50,000

| Andrew Walker

Toronto Dominion Bank (TSX:TD) (NYSE:TD) is an example of a top TSX Index stock that can help you build wealth…

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

3 Canadian Bank Stocks That Offer a Slice of U.S. Banking Profits

| Andrew Button

With massive operations in the U.S., The Toronto-Dominion Bank (TSX:TD)(NYSE:TD) outclasses its peers

Read more »

office buildings
Dividend Stocks

Why I’m Banking on a Rebound in Bank Stocks

| Joey Frenette

Why CIBC (TSX:CM)(NYSE:CM) should be at the top of your TFSA shopping list.

Read more »

Growing plant shoots on coins
Dividend Stocks

Lock in This Succulent 5.9% Banking Dividend by July 1

| Nelson Smith

Laurentian Bank of Canada (TSX:LB) offers one of Canada's best dividends. But be warned; you'll need to pick up shares…

Read more »

Man holding magnifying glass over a document
Dividend Stocks

2 Stocks That Would Benefit From Lower Interest Rates (and 1 You’d Be Better Off Avoiding)

| Jason Phillips

Two companies should benefit from the latest rumour of lower interest rates for longer, including Inter Pipeline Ltd (TSX:IPL), yielding…

Read more »

Glass piggy bank
Bank Stocks

How to Grow a Million-Dollar Retirement Portfolio on a Minimum Wage Job

| Saptarshi Datta

Bank of Montreal (TSX:BMO)(NYSE:BMO) could help contribute to becoming a retirement millionaire, according to this Fool.

Read more »

Arrowings ascending on a chalkboard
Dividend Stocks

How to Invest Successfully Like Warren Buffett

| Kay Ng

Follow Buffett’s footsteps and get great returns from buying Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) today.

Read more »

Increasing yield
Dividend Stocks

TFSA Investors: 2 High-Yield Stocks With Safe Dividends to Boost Passive Income

| Andrew Walker

Enbridge Inc. (TSX:ENB)(NYSE:ENB) and one other top dividend stock appear attractively priced right now and offer above-average yields.

Read more »

Businessmen teamwork brainstorming meeting.
Dividend Stocks

3 TSX Index Stocks to Help You Build a Million-Dollar RRSP

| Andrew Walker

Nutrien Ltd. (TSX:NTR) (NYSE:NTR) and another two TSX Index giants are attractive picks to anchor your RRSP portfolio. Here's why.

Read more »

Gold king in chess game face with the another silver team on black background (Concept for company strategy, business victory or decision)
Dividend Stocks

The King of Canadian Banking vs. Manulife Financial (TSX:MFC): Which Should You Buy?

| Joey Frenette

Manulife Financial Corporation (TSX:MFC)(NYSE:MFC) vs. this banking giant: which should you buy for your TFSA?

Read more »

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

A Cheap Banking Sector Stock With a 5% Dividend Yield for Your TFSA Portfolio Today

| Andrew Walker

Here's why Bank of Nova Scotia (TSX:BNS) (NYSE:BNS) deserves to be on your radar right now.

Read more »

edit Person using calculator next to charts and graphs
Bank Stocks

Alert! This Could Be a Banking Game Changer in the Summer

| Ambrose O'Callaghan

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and Royal Bank of Canada (TSX:RY)(NYSE:RY) stand to benefit from a dovish central bank…

Read more »

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

Why 2019 Is Shaping Up to Be the Year of Dividend Stocks

| Andrew Button

After years of dividend increases, stocks like Toronto-Dominion Bank (TSX:TD)(NYSE:TD) are great buys.

Read more »

Canadian Dollars
Dividend Stocks

3 Reliable Insurance Stocks to Buy This Summer

| Ryan Vanzo

Insurance stocks can have less risk than the market while providing a regular income stream. Find out why stocks like…

Read more »

Community homes
Bank Stocks

Was Warren Buffett Right to Bail on Canada’s Housing Market?

| Jason Phillips

Almost two years removed from his multi-billion-dollar investment in the Canadian housing market, did Warren Buffett make the right move…

Read more »

Hands holding trophy cup on sky background
Dividend Stocks

Not All Great Banks Are Big Banks

| Demetris Afxentiou

Investors looking to diversify their portfolios outside the big banks should consider the investment opportunity that is Laurentian Bank of…

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Bank Stocks

Should You Short These 3 Banking Stocks?

| Vishesh Raisinghani

Banks like Royal Bank of Canada (TSX:RY)(NYSE:RY) seem fairly valued, but investors need to account for a shifting economic cycle…

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

Are Canada’s Banking Stocks Ready to Crash?

| Mat Litalien, MBA

Canada's banking system is under attack by the bears. Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock is one of the best positioned to…

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

The Best Banking Bang for Your Buck

| Joey Frenette

Why Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is far too cheap to ignore at this juncture.

Read more »

Growing plant shoots on coins
Dividend Stocks

A Forever Dividend Stock That’s Ideal for TFSA Investors

| Demetris Afxentiou

Investors seeking long-term growth and income-earning potential should consider adding Toronto-Dominion Bank (TSX:TD)(NYSE:TD) to their portfolio.

Read more »

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

Cheap Investors: Turn $5000 Into $500,000 in 20 Years

| Amy Legate-Wolfe

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), Enbridge Inc. (TSX:ENB)(NYSE:ENB) and this one other stock are the perfect trio to bring you to…

Read more »

Man with no money. Businessman holding empty wallet
Stocks for Beginners

Consumer Debt Continues to Rise in Canada: 4 Ways it Could Affect Your Portfolio

| Daniel Da Costa

There are may ways rising debt levels in Canada could impact your portfolio. A company like BRP Inc (TSX:DOO)(NASDAQ:DOOO) selling…

Read more »

Dividend Stocks

Never Mind the Banking Bears: BMO (TSX:BMO) Is Still a Solid Dividend Stock

| Victoria Hetherington

Forget the naysayers -- Bank of Montreal (TSX:BMO)(NYSE:BMO) stock is solid and pays a stable dividend.

Read more »

question marks written reminders tickets
Dividend Stocks

Best Canadian Bank Today: TD Bank (TSX:TD) or CIBC (TSX:CM)?

| Karen Thomas, MSc, CFA

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) offers investors a juicy dividend yield of 5.43%, but Toronto-Dominion Bank (TSX:TD)(NYSE:TD) has the…

Read more »

Various Canadian dollars in gray pants pocket
Bank Stocks

Collect $400/Month With This Little-Known Stock

| Christopher Liew, CFA

CI Financial Corp. (TSX:CIX) is not as popular as Canadian banks, but the stock can deliver the same level of…

Read more »

office buildings
Bank Stocks

Bet on a Banking Revolution and Buy These 2 Stocks

| Ambrose O'Callaghan

Banks are ramping up investments to compete with FinTech companies like GoldMoney Inc. (TSX:XAU) and Mogo Finance Technology Inc. (TSX:MOGO)(NASDAQ:MOGO).

Read more »

Dad and son having fun outdoor. Healthy living concept
Dividend Stocks

The Best Banking Stock You Can Buy for the Next 20 Years

| Kay Ng

Which of Canada’s top banks should you buy and hold -- Royal Bank of Canada (TSX:RY)(NYSE:RY) or Toronto-Dominion Bank (TSX:TD)(NYSE:TD)?

Read more »

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

Banking Battle: TD (TSX: TD) vs. Scotiabank (TSX:BNS)

| Christopher Liew, CFA

Choosing between two premier Canadian banks and dividend aristocrats like Toronto Dominion Bank (TSX: TD)(NYSE:TD) and Bank of Nova Scotia…

Read more »

Value for money
Dividend Stocks

3 Value Stocks to Buy This Summer

| Ryan Vanzo

Want to add under-priced stocks to your portfolio? Now is the time to purchase value stocks like Manulife Financial (TSX:MFC)(NYSE:MFC)…

Read more »

Man holding magnifying glass over a document
Bank Stocks

What’s the Safest Banking Stock During a Recession?

| Amy Legate-Wolfe

If you're worried about a recession, you can't go wrong with Canadian banks. But if you're only choosing one, choose…

Read more »

edit Person using calculator next to charts and graphs
Bank Stocks

U.S. Banking Still Racking Up Big Profits: Are These 2 Canadian Bank Stocks Headed Higher?

| Ambrose O'Callaghan

U.S. bank profits are soaring, but stocks like Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Bank of Montreal (TSX:BMO)(NYSE:BMO) are risky pickups ahead…

Read more »

Gas pipelines
Energy Stocks

2 Oil Stocks to Buy and Hold if You’re a Pipeline Optimist

| Victoria Hetherington

Investors in Enbridge Inc. (TSX:ENB)(NYSE:ENB) and one other pipeline stock could have an interesting week ahead of them.

Read more »

Growing plant shoots on coins
Dividend Stocks

2 Cheap Dividend Stocks for Your TFSA

| Prosper Bakiny

Magna International Inc (TSX:MG) (NYSE:MGA) and Canadian Imperial Bank of Commerce (TSX:CM) (NYSE:CM) are both good dividend-paying stocks that trade…

Read more »

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

Ranking Canada’s Top Banking Stocks

| Mat Litalien, MBA

Which of Canada's Big Five banks is the best buy today? Ranking the best to the least attractive investment for…

Read more »

Piggy bank next to a financial report
Dividend Stocks

2 Banking Bets That Could Make You Rich

| Joey Frenette

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and one other bank could make your TFSA rich!

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.