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

Can You Get Rich by Investing in Bank of Nova Scotia (TSX:BNS)?

| Christopher Liew, CFA

Bank of Nova Scotia’s (TSX:BNS)(NYSE:BNS) excellent track record of dividend growth and dividend payments make the stock your best investment…

Read more »

Dividend Stocks

1 Top Tier Banking Stock to Purchase Right Now

| Christopher Liew, CFA

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is the stock made for income investors looking for a strong dividend play that…

Read more »

Energy Stocks

TFSA Investors: A Rock-Solid Dividend Payer Yielding Over 5.4%

| Debra Ray

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) excites investors with a 5.38% dividend yield without the geopolitical risk of oil.

Read more »

Dividend Stocks

3 Top Stocks to Build a TFSA Pension

| Andrew Walker

Owning shares of Fortis Inc. (TSX:FTS)(NYSE:FTS) and two Canadian industry leaders can set you up with a low-maintenance stream of…

Read more »

Dividend Stocks

TFSA and RRSP Retirement Investors: 2 Canadian Banks to Buy and Hold for Decades

| Karen Thomas, MSc, CFA

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) are the two Canadian banks that offer the most for…

Read more »

Dividend Stocks

TFSA Investors: A Top Dividend Stock I’d Buy Today With an Extra $6,000

| Andrew Walker

Bank of Nova Scotia (TSX:BNS) (NYSE:BNS) appears oversold today and offers a safe dividend with an attractive yield.

Read more »

Dividend Stocks

3 Financial Stock Picks for July

| Ryan Vanzo

Want diversification benefits without sacrificing upside potential? Stocks like Manulife Financial Corporation (TSX:MFC)(NYSE:MFC) and Alaris Royalty Corp. (TSX:AD) deliver just…

Read more »

Dividend Stocks

TFSA Investors: Is Royal Bank of Canada (TSX:RY) Stock a Buy Right Now?

| Andrew Walker

Royal Bank of Canada (TSX:RY)(NYSE:RY) is Canada's largest company and continues to generate strong results, but there are risks to…

Read more »

Dividend Stocks

New Toronto-Dominion Bank (TSX:TD) ETFs to Stash in Your TFSA Retirement Fund

| Joey Frenette

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) has a few new "smart" ETFs up its sleeves.

Read more »

Bank Stocks

Bank of Montreal (TSX:BMO): An Undervalued Giant

| Vishesh Raisinghani

Unlike its peers, Bank of Montreal (TSX:BMO)(NYSE:BMO) seems better prepared for higher loan delinquencies and interest rates.

Read more »

Dividend Stocks

Should You Buy TD Bank (TSX:TD) or BMO (TSX:BMO) Stock for Your TFSA?

| Victoria Hetherington

Bank of Montreal (TSX:BMO)(NYSE:BMO) goes up against another Big Five banking stock for a place in an investor's TFSA.

Read more »

Dividend Stocks

2 Value Stocks You Can Set and Forget

| Christopher Liew, CFA

National Bank of Canada (TSX:NA) and TC Energy Corp. (TSX:TRP)(NYSE:TRP) are not only value stocks but high-dividend payers. You can…

Read more »

Dividend Stocks

New RRSP Investors: Should Toronto-Dominion Bank (TSX:TD) Stock Be in Your Portfolio?

| Andrew Walker

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is often cited as a top stock pick. Should you buy the bank for your RRSP today?

Read more »

Dividend Stocks

3 Banking Stock Picks for July

| Ryan Vanzo

Canada's banks sector, which includes giants like Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), has a proven history of resiliency and big…

Read more »

Dividend Stocks

Income Investors: 3 Top Dividend Stocks Yielding 5-6% for Your TFSA

| Andrew Walker

Canadian Imperial Bank of Commerce (TSX:CM) (NYSE:CM) and another two high-quality companies offer above-average yield and reasonably priced stocks today.

Read more »

Tech Stocks

Sell These 3 Top Stocks Now

| Ryan Vanzo

Well-known stocks are often assigned a popularity premium. That's bad news for investors of Laurentian Bank of Canada (TSX:LB), Shopify…

Read more »

Dividend Stocks

3 TSX Banking Stocks to Go All-In on and Never Look Back!

| Jason Phillips

Here are three Dividend Aristocrats from Canada’s financial sector that investors should feel very confident about, including Royal Bank of…

Read more »

Dividend Stocks

Banking on Yield: 2 TFSA-Worthy Banks With Yields of 5.5% to Buy Right Now

| Joey Frenette

CIBC (TSX:CM)(NYSE:CM) and another bank stock to buy if you crave yield.

Read more »

Dividend Stocks

TFSA Investors: Why You Should Buy Banking Stocks

| Stephanie Bedard-Chateauneuf, MBA

Stocks in the banking sector like Toronto-Dominion Bank (TSX:TD)(NYSE:TD) are ideal for a TFSA.

Read more »

Dividend Stocks

3 Top Dividend Stocks to Buy If You’re Investing for Retirement

| Haris Anwar

Fortis Inc. (TSX:FTS)(NYSE:FTS) is among 3 top dividend stocks that could be a great addition to any retirement portfolio.

Read more »

Dividend Stocks

How to Add Safe Global Exposure to Your RRSP

| Andrew Walker

Sun Life Financial Inc. (TSX:SLF) (NYSE:SLF) and a top Canadian bank are two stocks that can help investors get global…

Read more »

Dividend Stocks

Canadian Investors: Are You Banking on Big TFSA Returns?

| Andrew Walker

Royal Bank of Canada (TSX:RY) (NYSE:RY) and Toronto Dominion Bank (TSX:TD) (NYSE:TD) have delivered impressive long-term returns for shareholders. Should…

Read more »

Dividend Stocks

Why Bank of Nova Scotia (TSX:BNS) Is the 1 Banking Stock You’ll Want to Own for the Next 30 Years

| Jason Phillips

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is coming off some big investments in 2018. Find out why this is the one…

Read more »

Dividend Stocks

Cheap Bank Alert: A Fascinating Banking Bargain to Back Up the Truck on Today

| Joey Frenette

Why Canadian Western Bank (TSX:CWB) may be the bank with the most upside potential.

Read more »

Dividend Stocks

Is TD Bank (TSX:TD) Stock the Best Banking Name to Own?

| Brian Paradza, CFA

Current economic settings could allow Toronto-Dominion Bank (TSX:TD)(NYSE:TD) to continue beating peers.

Read more »

Dividend Stocks

Passive Income Alert: This BMO ETF Has the “Safest” 6.5% Yield on the TSX Index

| Joey Frenette

Why the BMO Canadian High Dividend Covered Call ETF (TSX:ZWC) has one of the strongest 6.5% yields out there.

Read more »

Bank Stocks

TFSA Investors: Become a Millionaire by Loading Up on Canada’s Best Banking Stocks

| Nelson Smith

You don't have to invest in Bank of Montreal (TSX:BMO)(NYSE:BMO) to become a TFSA millionaire, but it sure does help.

Read more »

Tech Stocks

Bitcoin Skyrockets: How Should Canadians Be Banking on the Crypto Craze?

| Joey Frenette

Why VersaBank (TSX:VB) may be a sexier investment that Bitcoin at this juncture.

Read more »

Dividend Stocks

TSX Pairs Trading: One Banking Stock to Go Long — and One to Go Short

| Jason Phillips

How a pairs trading strategy works with banking stocks including Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) currently yielding investors a 4.88%…

Read more »

Dividend Stocks

Why Scotiabank’s (TSX:BNS) Latest Overseas Sale Makes Its Stock a Solid Buy

| Victoria Hetherington

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is looking like a strong play at the moment thanks to a strategic overseas sale.

Read more »

Dividend Stocks

3 Cheap Canadian Banking Stocks With Ultra-Low P/E Ratios

| Andrew Button

Thanks to perceived weaknesses in the macro environment, banks like Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) are getting very cheap.

Read more »

Dividend Stocks

Key Deals Make Bank of Nova Scotia (TSX:BNS) Stock a Top Banking Pick

| Mat Litalien, MBA

The Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is disposing of non-core assets which is paving the way for a brighter future.

Read more »

Bank Stocks

Retirees: Create Your Own Pension With These 3 CPP-Approved Investments

| Nelson Smith

Invest just like the Canada Pension Plan with WSP Global Inc. (TSX:WSP), Royal Bank of Canada (TSX:RY)(NYSE:RY), and TMX Group…

Read more »

Dividend Stocks

Is This Canadian Bank at Risk?

| Kris Knutson

With Canadian debt so high, there is a good chance that a recession will occur. Should you buy shares of…

Read more »

Bank Stocks

Is This Canadian Banking Giant and its Juicy 5% Yield a Poor Investment?

| Matt Smith

If the short-sellers are right about a looming deterioration in the credit cycle, then Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM)…

Read more »

Dividend Stocks

Lazy Investors: How to Make Passive Income

| Kay Ng

Want to buy and forget solid income-producing assets? Start with Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and another quality dividend stock today.

Read more »

Bank Stocks

RRSP Investors: Here’s Why an All-Banking RRSP Can Work for You

| Ambrose O'Callaghan

An all-banking RRSP can succeed on the back of growth and income from stocks like Royal Bank of Canada (TSX:RY)(NYSE:RY)…

Read more »

Dividend Stocks

Banking on Yield: Is Bank of Montreal (TSX:BMO) Stock a Good Dividend Buy?

| Andrew Walker

Bank of Montreal (TSX:BMO)(NYSE:BMO) trades at a reasonable multiple and has a balanced revenue stream. Is this the right time…

Read more »

Dividend Stocks

Banks or Utilities: Which Stock Should Investors Buy for Defensive Dividends?

| Victoria Hetherington

Should defensive investors buy Laurentian Bank of Canada (TSX:LB) or Enbridge Inc. (TSX:ENB)(NYSE:ENB) stock for stable passive income?

Read more »

Stocks for Beginners

Which Canadian Banking Stock Offers the Best Opportunity to Buy?

| Haris Anwar

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) offers the best upside potential. Find out why.

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.