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

A Cheap Dividend Stock I’m Buying for My TFSA

| Joey Frenette

Why CIBC (TSX:CM)(NYSE:CM) is a strong buy now while short-seller concerns linger after a relatively decent quarter.

Read more »

Bank Stocks

Canada’s Best Dividend Stocks Becoming Expensive: Time to Buy?

| Haris Anwar

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is among the best dividend stocks from Canada. Here is why it's a good to…

Read more »

Energy Stocks

The Number One Mistake You Could Make in 2020

| Amy Legate-Wolfe

Don't let a poor stock market fool you!

Read more »

Bank Stocks

Should You Buy Bank of Nova Scotia (TSX:BNS) or CIBC (TSX:CM) Stock Today?

| Andrew Walker

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) are enjoying a nice recovery. Is one bank…

Read more »

Dividend Stocks

Is TD Bank (TSX:TD) Still Canada’s Top Banking Stock?

| Mat Litalien, MBA

Strong expected growth rates, cheap valuations ,and the best dividend-growth rates in the country make Toronto-Dominion Bank (TSX:TD)(NYSE:TD) a top…

Read more »

Dividend Stocks

Retirement Wealth: How to Turn a $20,000 TFSA into $200,000

| Andrew Walker

A popular investment strategy that focuses on top dividend stocks such as Toronto-Dominion Bank (TSX:TD) can build TFSA wealth.

Read more »

Dividend Stocks

Baby Boomers: Earn $888 Extra Monthly Income While Protecting OAS Payments

| Christopher Liew, CFA

Top dividend stocks National Bank of Canada (TSX:NA) and Fortis Inc. (TSX:FTS)(NYSE:FTS) can negate the impact of taxes on your…

Read more »

Dividend Stocks

Want to Retire Wealthy? 3 New BMO (TSX:BMO) ETFs Are All You’ll Need

| Joey Frenette

These three Bank of Montreal (TSX:BMO)(NYSE:BMO) ETFs meet all the needs of investors who want to retire wealthy.

Read more »

Dividend Stocks

2 Stocks I Like for the Next Decade

| Kay Ng

Here’s why you can trust Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and another stock to grow your money.

Read more »

Dividend Stocks

Canadians: These 3 Dividend Titans Have a Payout Streak of up to 190 Years

| Christopher Liew, CFA

For more than 100 years, Bank of Montreal (TSX:BMO)(NYSE:BMO), Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) have been…

Read more »

Dividend Stocks

2 Cheap Dividend Stocks for a Self-Directed RRSP Portfolio

| Andrew Walker

Here's why Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and a top commodity stock deserve to be on your RRSP radar.

Read more »

Dividend Stocks

This Is 1 of the Best High-Yielding Stocks to Buy and Beat Low Rates

| Haris Anwar

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is a low-risk dividend stock offering one of the best yields. Here is why.

Read more »

Dividend Stocks

New Investors: Avoiding These 3 Mistakes Can Save You Big Money

| Kay Ng

Avoid these mistakes and make money from investing in great businesses like Toronto-Dominion Bank (TSX:TD)(NYSE:TD).

Read more »

Energy Stocks

TSX Investors Keep Making This Costly Mistake

| Ryan Vanzo

Find out why you should ditch mega-cap stocks like Royal Bank of Canada (TSX:RY)(NYSE:RY) and choose tiny, high-growth stocks like…

Read more »

Bank Stocks

CIBC (TSX:CM) vs. Scotiabank (TSX:BNS): Which Is the Better Buy?

| Adam Othman

Between Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), find out which one is a better…

Read more »

Dividend Stocks

New Investors: How to Choose the 1st Stocks for Your Portfolio

| Kay Ng

Make money by choosing quality businesses, such as Royal Bank of Canada (TSX:RY)(NYSE:RY), that pay dividends.

Read more »

Dividend Stocks

3 Dividend Aristocrats That Will Bolster Your RRSP

| Ambrose O'Callaghan

Stocks like Toromont Industries Ltd. (TSX:TIH) have achieved at least a quarter century of dividend-growth, which should pique the interest…

Read more »

Dividend Stocks

Millennials: This Ridiculously Easy Plan Is the Key to Early Retirement

| Nelson Smith

Gunning for early retirement? Great stocks like Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Telus Corporation (TSX:T)(NYSE:TU) can help.

Read more »

Dividend Stocks

2 Great Income Stocks That Will Double Their Dividends

| Kay Ng

Get solid yields and plenty of room for growth with Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Canadian National Railway (TSX:CNR)(NYSE:CNI).

Read more »

Dividend Stocks

RBC (TSX:RY) Wants You to Rethink Your Savings Plan

| Debra Ray

Royal Bank of Canada (TSX:RY)(NYSE:RY) is worried that Canadians are settling for low-interest savings accounts when they could earn more…

Read more »

Energy Stocks

This Woman Retired at Age 56 — and Left Canada to Live in Belize

| Christopher Liew, CFA

Exchange Income Corporation (TSX:EIF), Pinnacle Renewable Energy Inc. (TSX:PL), and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) are must own stocks…

Read more »

Energy Stocks

TFSA Investors: 2 Cheap Dividend Stocks in the TSX Index to Own for Decades

| Andrew Walker

Here's why Enbridge Inc. (TSX:ENB) (NYSE:ENB) and a top financial stock appear attractive right now.

Read more »

Dividend Stocks

2 Non-Energy Stocks to Buy If Oil Continues Its Rally

| Daniel Da Costa

If oil can continue its rally, Gamehost Inc (TSX:GH) is one of the top stocks poised to benefit from an…

Read more »

Dividend Stocks

Many Canadians Are Failing to Take Full Advantage of Their TFSA

| Matt Smith

Access the power of compounding and accelerate wealth creation by owning Brookfield Infrastructure Partners L.P. (TSX:BIP.UN)(NYSE:BIP) in your TFSA.

Read more »

Bank Stocks

3 TFSA Mistakes Setting You Up to Fail

| Amy Legate-Wolfe

Get ahead of the recession and avoid these mistakes today!

Read more »

Dividend Stocks

Income Investors: Give Your Passive Income a Boost With This Simple Strategy

| Daniel Da Costa

For investors looking to increase the passive income they receive, they should consider a fund like BMO Covered Call Canadian…

Read more »

Dividend Stocks

Why Manulife (TSX:MFC) Stock Fell 4% in August

| Ryan Vanzo

Manulife Financial Corporation (TSX:MFC)(NYSE:MFC) stock fell 4% in August, but if you're worried about a downturn, this might be the…

Read more »

Bank Stocks

Pension Wealth 101: How to Turn $100,000 Into $1.4 Million

| Andrew Walker

Royal Bank of Canada (TSX:RY) (NYSE:RY) is a great example of a stock investors can hold for decades to build…

Read more »

Bank Stocks

Investing 101: ETFs

| Chen Liu

If you’re new to investing, then this five-part series is for you!

Read more »

Dividend Stocks

RRSP Investors: 3 Top Stocks to Help You Retire Rich

| Andrew Walker

Nutrien Ltd (TSE:NTR)(NYSE:NTR), a transportation giant, and a top bank all look attractive right now for a self-directed RRSP.

Read more »

Dividend Stocks

Is Now the Time to Buy Canadian Imperial Bank of Commerce (TSX:CM)?

| Matt Smith

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is attractively valued, making now the time to buy and lock in a 5%…

Read more »

Dividend Stocks

Why These 3 Bank Stocks Beat the Rest Recently

| Kay Ng

Here’s why you can get big dividends and upside, too, from Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), Canadian Imperial Bank of…

Read more »

Dividend Stocks

Why Rising Jobs Numbers Don’t Mean the Economy Is Strong

| David Jagielski

Without the economy performing well, a stock like Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) could be in trouble.

Read more »

Dividend Stocks

Are Canadian Banks Skating on Thin Ice?

| Joey Frenette

Are battered banks like CIBC (TSX:CM)(NYSE:CM) still worth owning after the latest bottom bounce? Or will bulls become trapped?

Read more »

Dividend Stocks

TD Bank (TSX:TD) Could Be Doomed With a Housing Crash

| Christopher Liew, CFA

While Toronto Dominion Bank’s (TSX:TD)(NYSE:TD) exposure to Canada’s housing markets is significant, the bank is not in danger of incurring…

Read more »

Energy Stocks

3 Stocks to Buy Ahead of the Next Market Crash

| Amy Legate-Wolfe

Fortis Inc. (TSX:FTS)(NYSE:FTS) and these other two stocks are your best chance of beating a fallen market.

Read more »

Dividend Stocks

3 Highly Defensive Stocks to Buy Before October

| Victoria Hetherington

Here's why Canadian investors might want to buy Enbridge Inc. (TSX:ENB)(NYSE:ENB) and two other top stocks before October.

Read more »

Dividend Stocks

RRSP Investors: 2 Top Canadian Stocks With Global Exposure for 2020

| Andrew Walker

Here's why Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and a top global asset manager deserve to be on your RRSP radar.

Read more »

Dividend Stocks

TFSA Pension: Should You Buy Enbridge (TSX:ENB) or CIBC (TSX:CM) Stock for Passive Income?

| Andrew Walker

Enbridge Inc. (TSX:ENB)(NYSE:ENB) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) pay above-average dividends that continue to grow. Is one a…

Read more »

Dividend Stocks

Pension Income 101: Top TFSA Stocks for Retirees to Avoid OAS Clawbacks

| Andrew Walker

Here's how holding top dividend stocks such as Toronto-Dominion Bank (TSX:TD) (NYSE:TD) inside a TFSA can boost income without putting…

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.