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

Attention Income Investors: 2 High-Yield Stocks to Own for Decades

| Andrew Walker

Here's why BCE Inc. (TSX:BCE)(NYSE:BCE) and one other high-yield Canadian stock deserve to be on your income radar.

Read more »

Dividend Stocks

3 Reasons to Buy and Forget Manulife Financial (TSX:MFC)

| Demetris Afxentiou

Manulife Financial Corporation (TSX:MFC)(NYSE:MFC) has long been regarded as a viable long-term investment option, but few investors may realize just…

Read more »

Dividend Stocks

Attention Millennial Couples: How to Turn a $100,000 TFSA into $1 Million

| Andrew Walker

Here's how using a self-directed TFSA to hold dividend stocks such as Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Fortis Inc.…

Read more »

Dividend Stocks

Inject Some Income Into Your TFSA With These 3 Dividend Studs

| Andrew Button

Dividend stocks like Royal Bank of Canada (TSX:RY)(NYSE:RY) can inject income into your TFSA whether the market goes up or…

Read more »

Dividend Stocks

Millennials: How to Get to $1,000,000 by Retirement

| David Jagielski

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is a great stock to hold for the long term that can accumulate a lot of income for…

Read more »

Dividend Stocks

Warren Buffett Is Betting Big on Bank Stocks: Should You?

| Andrew Button

With Warren Buffett betting big on U.S. bank stocks, is now the time to bet on Canadian banks with U.S.…

Read more »

Dividend Stocks

Short-Sellers Betting Against Toronto-Dominion Bank (TSX:TD) Will Lose

| Matt Smith

Ignore the short-sellers and buy Toronto-Dominion Bank (TSX:TD)(NYSE:TD) for growth and its dividend.

Read more »

Bank Stocks

Will These 2 Bank Stocks Finish Above $100 in 2019?

| Ambrose O'Callaghan

Royal Bank of Canada (TSX:RY)(NYSE:RY) and Bank of Montreal (TSX:BMO)(NYSE:BMO) are thriving above the $100 mark in 2019. Are harsher…

Read more »

Dividend Stocks

1 Top Bank Stock Yielding +4% That Belongs in Every TFSA

| Matt Smith

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is attractively valued and poised to unlock considerable value for long-term investors.

Read more »

Dividend Stocks

2 Timely Dividend Buys for Your Passive-Income Fund

| Joey Frenette

Buy Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and one other reliable dividend stock for your TFSA income fund.

Read more »

Bank Stocks

Investors Beware: Toronto-Dominion (TSX:TD) Isn’t What It Used to Be

| Amy Legate-Wolfe

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) may be one of Canada's biggest banks, but if a recession hits this bank may have a…

Read more »

Bank Stocks

3 Tricks to Maximize Your RRSP Portfolio Value

| Ryan Vanzo

Whether you're investing in growth stocks like Canada Goose Holdings Inc (TSX:GOOS)(NYSE:GOOS) or stable dividend payers like Bank of Nova Scotia (TSX:BNS)(NYSE:BNS),…

Read more »

Dividend Stocks

Should Toronto-Dominion Bank (TSX:TD) or CIBC (TSX:CM) Stock Be on Your Buy List Today?

| Andrew Walker

Toronto Dominion Bank (TSX:TD)(NYSE:TD) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) are off their recent highs. Is one now a…

Read more »

Dividend Stocks

Better Buy for Your TFSA: Bank of Nova Scotia (TSX:BNS) or Toronto-Dominion Bank (TSX:TD)?

| Prosper Bakiny

Bank of Nova Scotia (TSX:BNS) (NYSE:BNS) and Toronto-Dominion Bank (TSX:TD) (NYSE:TD) are both interesting options for dividend investors, but which…

Read more »

Dividend Stocks

Avoid These Big Mistakes in Your TFSA

| Kay Ng

Find out why it won’t be a mistake to invest in Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock in your TFSA for the…

Read more »

Bank Stocks

3 Reasons Why Bank of Montreal (TSX:BMO)(NYSE:BMO) Is a Top Choice in the Face of a Recession

| Christopher Liew, CFA

The prospects of recession will spook investors every time but Bank of Montreal (TSX:BMO)(NYSE:BMO) will always be a solid countermeasure…

Read more »

Dividend Stocks

2 Core Growth Stocks for Your TFSA

| Kris Knutson

TFSA investors need a combination of capital appreciation and dividend growth that companies like Toronto Dominion Bank (TSX:TD)(NYSE:TD) can provide…

Read more »

Dividend Stocks

A Closer Look at the 2 Cheapest Banks on the TSX: Which Is the Better Buy?

| Joey Frenette

Canadian Western Bank (TSX:CWB) and one other bank going up head to head. Which is the better bet for your…

Read more »

Dividend Stocks

Retirees: 3 Top Dividend Stocks to Buy Now

| Haris Anwar

Here is what makes Toronto-Dominion Bank (TSX:TD)(NYSE:TD) a top dividend stock to buy to generate a growing income stream.

Read more »

Bank Stocks

Bitcoin Just Rose 20% in Under 48 Hours: Time to Buy?

| Andrew Button

Bitcoin is once again on the rise. But with banks like the Toronto-Dominion Bank (TSX:TD)(NYSE:TD) taking action against it, is…

Read more »

Dividend Stocks

Is Royal Bank of Canada (TSX:RY) or Toronto-Dominion Bank (TSX:TD) a Buy for Your TFSA Today?

| Joey Frenette

Royal Canadian Bank (TSX:RY)(NYSE:RY) or Toronto-Dominion Bank (TSX:TD)(NYSE:TD) look like great buy-the-dip candidates, but which is the better bank for…

Read more »

Dividend Stocks

Income Investors: Should You Buy CIBC (TSX:CM) Stock for its Dividend Growth and 5% Yield?

| Andrew Walker

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) has a history of making big blunders, but the market might be too focused…

Read more »

Dividend Stocks

1 Canadian Bank Stock I’m Buying With an Extra $5,000

| Nelson Smith

The time to buy Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) shares is now. Here's why I'm buying the company for my…

Read more »

Dividend Stocks

3 Reasons to Buy Toronto-Dominion Bank (TSX:TD) Stock Despite the Sluggish Economy

| Andrew Button

Although this sluggish economy poses a short-term threat to The Toronto-Dominion Bank's (TSX:TD)(NYSE:TD) business, it may still be a buy.

Read more »

Dividend Stocks

5 Reasons Why Royal Bank of Canada (TSX:RY) Is Your Top TSX Bank Stock Right Now

| Jason Phillips

Foolish investors want to make sure they're in the right stocks at the right time. Find out why Royal Bank…

Read more »

Dividend Stocks

TFSA Alert: A Top Reason to Buy Bank of Nova Scotia (TSX:BNS) Stock

| Haris Anwar

This is one top reason to buy Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) stock now and keep it in your TFSA.

Read more »

Dividend Stocks

The #1 TFSA Bank Stock to Buy Today

| Kris Knutson

Although the domestically exposed Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) was not my favourite bank, there are reasons to buy…

Read more »

Bank Stocks

Are Canadian Banks Due for a Huge Relief Rally?

| Joey Frenette

Why Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and other big banks may be ripe for a huge relief rally in 2019.

Read more »

Stocks for Beginners

Is Bank of Nova Scotia (TSX:BNS) Stock a Buy Right Now?

| Andrew Walker

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is trading at reasonable multiple and has strong long-term growth potential. Is the recent pullback…

Read more »

Dividend Stocks

How Young Investors Can Build a $1.8 Million TFSA Retirement Fund

| Andrew Walker

Royal Bank of Canada (TSX:RY)(NYSE:RY) and another top Canadian stock have made some investors quite rich. Here's how.

Read more »

Dividend Stocks

Is There Sudden Danger Lurking in Canada’s “Safest” Stocks?

| Victoria Hetherington

Are stocks like Toronto-Dominion Bank (TSX:TD)(NYSE:TD) really immune from a widespread downturn? Let’s review the data.

Read more »

Dividend Stocks

RRSP Investors: Is Toronto-Dominion Bank (TSX:TD) Stock a Safe Buy Today?

| Andrew Walker

Toronto Dominion Bank (TSX:TD) (NYSE:TD) is often cited as a top pick for a retirement portfolio. Is this stock still…

Read more »

Dividend Stocks

A Bank Stock I’d Sell Now Before Things Get Uglier

| Joey Frenette

Why Lauarentian Bank (TSX:LB) and the massive dividend yield aren't worthy of your investment dollars at this juncture.

Read more »

Bank Stocks

Act Now: This Top Bank Stock Just Set off a Buy Signal

| Ambrose O'Callaghan

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) stock looks discounted as we move into April.

Read more »

Dividend Stocks

Income Investors: CIBC (TSX:CM) Is Far Too Cheap to Ignore

| Joey Frenette

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) stock is a must-buy for long-term income investors. Here's why it's time to back…

Read more »

Energy Stocks

3 Stocks Poised for Huge Growth Over the Next Decade

| Amy Legate-Wolfe

If you're looking for long-term, steady growth over the next decade, Royal Bank of Canada (TSX:RY)(NYSE:RY), Enbridge Inc. (TSX:ENB)(NYSE:ENB) and…

Read more »

Bank Stocks

2 ETFs to Save You From Market Volatility

| Amy Legate-Wolfe

Ahead of a potentially volatile market, Horizons S&P/TSX 60 Index ETF (TSX:HXT) and BMO Low Volatility Canadian Equity ETF (TSX:ZLB) could be…

Read more »

Dividend Stocks

Get Defensive: 3 Lesser-Known Banks for a Dividend Investor

| Victoria Hetherington

Holding shares in regional banks such as Canadian Western Bank (TSX:CWB) may prove to be a safer strategy than investing…

Read more »

Bank Stocks

Why Royal Bank of Canada (TSX:RY) Is About to Crash: When it Does, Buy it!

| Amy Legate-Wolfe

Royal Bank of Canada (TSX:RY)(NYSE:RY) is trading high, and now might be the time to sell and buy back later…

Read more »

Dividend Stocks

2 Dividend Stocks to Boost Retirement Income

| Andrew Walker

Here's why Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and another high-yield income stock might be interesting picks 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.