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

How to Turn Your $6,000 TFSA Contribution Into $88,000

| Andrew Walker

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is just one example of a quality dividend stock that can help investors set aside some serious…

Read more »

Dividend Stocks

Why You Should Avoid CIBC (TSX:CM) Stock

| Mat Litalien, MBA

Don't be fooled by Canadian Imperial Bank of Commerce's (TSX:CM)(NYSE:CM) cheap valuation. It is one of Canada's worst-performing bank stocks.

Read more »

Bank Stocks

Here’s Why TD Bank (TSX:TD) Is a Risky Buy in June

| Ambrose O'Callaghan

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock may be a risky pick up after earnings as risks build up in the broader market.

Read more »

Dividend Stocks

This Top Dividend Stock Is Selling Cheap: Time to Stash it in Your TFSA?

| Haris Anwar

Here is a top reason to buy Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) stock and add it to your TFSA.

Read more »

Dividend Stocks

2 Top Banks Stocks That Just Raised Their Payouts

| David Jagielski

Bank of Montreal (TSX:BMO)(NYSE:BMO) and this other bank stock are coming off solid quarters where they also announced they would be…

Read more »

Dividend Stocks

3 Top Dividend Stocks to Buy Right Now and Hold for a Decade

| Andrew Walker

TC Energy Corp (TSX:TRP)(NYSE:TRP) and another two TSX Index stocks offer attractive yield and solid upside potential right now.

Read more »

Dividend Stocks

RRSP Investors: Canadian Bank Stocks Continue to Be Core Holdings

| Karen Thomas, MSc, CFA

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Royal Bank of Canada (TSX:RY)(NYSE:RY) continue to maintain their leader status, while Bank of Nova Scotia…

Read more »

Dividend Stocks

Young Investors: How to Snowball Your $15,000 TFSA Into a $120,000 Retirement Nest Egg

| Andrew Walker

Bank of Montreal (TSX:BMO)(NYSE:BMO) and another top dividend stock appear cheap today. Here's how buying at the right time can…

Read more »

Dividend Stocks

Should You Buy TD Bank (TSX:TD) Stock Today?

| Mat Litalien, MBA

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock is still Canada's best after it was the only Big Five bank to top earnings estimates…

Read more »

Dividend Stocks

These Canadian Bank Stocks Are Tumbling Today, But Should You Buy?

| Victoria Hetherington

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and one other Big Six financial stock are down, but are they worth buying?

Read more »

Dividend Stocks

Canadian Imperial Bank of Commerce (TSX:CM): So Cheap, it’s Embarrassing

| Joey Frenette

Why Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is a severely undervalued dividend king after its latest clobbering.

Read more »

Dividend Stocks

2 TSX Index Stocks to Buy As Bond Yields Fall

| Andrew Walker

BCE Inc. (TSX:BCE) (NYSE:BCE) is hitting a new 12-month high and more gains could be on the way. Here's why.

Read more »

Dividend Stocks

Toronto-Dominion Bank (TSX:TD): A Truly Wonderful Stock at an Extremely Fair Price

| Joey Frenette

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is the best bank for your TFSA buck. Here's why it's time to double-down after its second-quarter…

Read more »

Dividend Stocks

Retire Early: How $25,000 Can Become $300,000 in Your TFSA in 20 Years

| Andrew Walker

Investing in Royal Bank of Canada (TSX:RY)(NYSE:RY) and other top TSX Index dividend stocks could set you up for early…

Read more »

Dividend Stocks

How to Generate $7,000 in Annual Tax-Free Passive Income

| Andrew Walker

Power Financial Corp. (TSX:PWF) is one of many Canadian stocks that pays attractive and growing dividends and that deserve to…

Read more »

Dividend Stocks

2 “Safe” Investments to Consider Before Buying Those Cheap Oil Stocks

| Victoria Hetherington

For dividend investors, Northland Power Inc. (TSX:NPI) and one other defensive stock could be safer than oil producers at the…

Read more »

Dividend Stocks

Latest Results Confirm Royal Bank of Canada (TSX:RY) Is the Best Big Bank to Own

| Matt Smith

Get ready for Royal Bank of Canada (TSX:RY)(NYSE:RY) to soar as earnings grow.

Read more »

Dividend Stocks

Time to Buy Bank of Montreal (TSX:BMO) Before Earnings?

| Joey Frenette

Bank of Montreal (TSX:BMO)(NYSE:BMO) is a wonderful business at a fair price, but should investors buy before Q2?

Read more »

Dividend Stocks

Ignore Bank of Nova Scotia’s (TSX:BNS) Earnings Miss and Buy Its Stock Today

| Matt Smith

Despite missing on earnings, there are signs of solid growth ahead for Bank of Nova Scotia (TSX:BNS)(NYSE:BNS).

Read more »

Dividend Stocks

Is a Recession in Canada on its Way?

| Matt Smith

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is attractively valued, making now the time to buy.

Read more »

Dividend Stocks

Why Bank of Nova Scotia (TSX:BNS) Stock Is a Buy Now!

| Kay Ng

Now’s the time to buy Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) with an initial yield of about 5%!

Read more »

Dividend Stocks

Why Toronto-Dominion Bank (TSX:TD) Is a Great Way to Gain Exposure to the Canadian Economy

| Daniel Da Costa

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) continues to be one of the best performers in a highly stable Canadian banking industry. With lots…

Read more »

Dividend Stocks

3 Stocks to Ride a Toronto Raptors Rally

| Andrew Walker

The Toronto Raptors are headed to the NBA finals, and that bodes well for Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and…

Read more »

Dividend Stocks

3 Passive Income Stocks to Add to Your TFSA Today

| Andrew Walker

Here's why Canadian Imperial Bank of Commerce (TSX:CM) (NYSE:CM) and another two top TSX Index dividend stocks might be interesting…

Read more »

Bank Stocks

Should You Buy Royal Bank (TSX:RY) After Earnings?

| Ambrose O'Callaghan

Royal Bank of Canada (TSX:RY)(NYSE:RY) had another strong quarter but the stock comes at a high price as risks build…

Read more »

Dividend Stocks

3 Key Takeaways from Toronto-Dominion Bank’s (TSX:TD) Q2 Results

| David Jagielski

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) continued to show strong growth in its latest quarterly results as it proved to investors yet again why…

Read more »

Dividend Stocks

3 Bank Stocks Worth Buying in 2019

| Ryan Vanzo

Want both stability and impressive dividends? Check out Canadian bank stocks like National Bank of Canada (TSX:NA), Canadian Imperial Bank…

Read more »

Bank Stocks

Despite This Bank Stock’s Run, it’s Still a Buy

| Will Ashworth

In like a lion, out like a lamb. Equitable Group Inc (TSX:EQB) was up 24% year to date heading into…

Read more »

Bank Stocks

Why You Should Ignore the Buy Signal for This Top Canadian Bank Stock

| Ambrose O'Callaghan

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) has dropped sharply after releasing its second-quarter 2019 results.

Read more »

Dividend Stocks

CIBC (TSX:CM) Drops the Ball on Earnings: Should You Drop the Stock?

| Joey Frenette

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) stock plunged 4.4% on its second-quarter earnings. Here's what investors should do.

Read more »

Dividend Stocks

Is CIBC (TSX:CM) Stock a Great Buy at a 5.2% Yield?

| Kay Ng

How much upside does Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) stock offer?

Read more »

Dividend Stocks

5 Outstanding TSX Dividend Stocks That Have Been Flying Under Your Radar — Until Now

| Jason Phillips

When it comes to investing it certainly pays to do your homework. Learn more about these five unknown and unloved…

Read more »

Dividend Stocks

Why Toronto-Dominion Bank (TSX:TD) Stock Is Still a Strong Buy

| Kay Ng

Here’s why you should consider buying Toronto-Dominion Bank (TSX:TD)(NYSE:TD) for total returns and a growing dividend.

Read more »

Dividend Stocks

2 Potential Black Swan Factors Canadian Investors Need to Know About

| Victoria Hetherington

Defensive stocks like Toronto-Dominion Bank (TSX:TD)(NYSE:TD) may have what it takes to weather a market downturn.

Read more »

Dividend Stocks

Royal Bank of Canada (TSX:RY) Beats on Earnings

| Andrew Button

After beating on Q2 earnings, Royal Bank of Canada (TSX:RY)(NYSE:RY) is starting to look like a buy

Read more »

Bank Stocks

3 Perfect Stocks for Your RRSP

| Amy Legate-Wolfe

Get the perfect RRSP portfolio by investing in Enbridge Inc. (TSX:ENB)(NYSE:ENB), Royal Bank of Canada (TSX:RY)(NYSE:RY), and Horizons S&P/TSX 60 Index ETF (TSX:HXT).

Read more »

Bank Stocks

3 Top Growth Stocks to Buy and Hold Forever

| Christopher Liew, CFA

Investors longing for a dividend-producing portfolio that can be owned for eternity should pick Bank of Montreal (TSX:BMO)(NYSE:BMO), Canadian Imperial…

Read more »

Dividend Stocks

Is This Earnings Miss Really an Opportunity?

| Demetris Afxentiou

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) reported weaker-than-expected results in the most recent quarter but does this still make the…

Read more »

Dividend Stocks

Should You Buy Royal Bank of Canada (TSX:RY) Stock Today?

| Kay Ng

Is it a good time to buy Royal Bank of Canada (TSX:RY)(NYSE:RY) stock for dividends?

Read more »

Dividend Stocks

Should You Buy Canadian National Railway (TSX:CNR) or Toronto-Dominion Bank (TSX:TD) Stock Right Now?

| Andrew Walker

Canadian National Railway Company (TSX:CNR)(NYSE:CNI) and Toronto Dominion Bank (TSX:TD)(NYSE:TD) are two of Canada's top stocks. Is one a better…

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.