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

Is Toronto-Dominion Bank (TSX:TD) Still Canada’s Best Bank Stock?

| Mat Litalien, MBA

Toronto-Dominion Bank's (TSX:TD)(NYSE:TD) stock has consistently outperformed its peers. After mixed quarterly results, is it still Canada's best bank stock?

Read more »

Dividend Stocks

5 Top Canadian Stocks to Start a Balanced Retirement Portfolio Today

| Andrew Walker

Here's why Brookfield Asset Management Inc. (TSX:BAM.A)(NYSE:BAM) and another four top Canadian stocks deserve to be on your radar.

Read more »

Dividend Stocks

Is This a Danger Zone or an Undervalued Mini-Portfolio?

| Victoria Hetherington

Husky Energy Inc. (TSX:HSE) has been undervalued for some time now, but are stocks like it worth buying for the…

Read more »

Dividend Stocks

Recession Risk: This 1 Vulnerable Stock

| Kris Knutson

Even though Goeasy Ltd. (TSX:GSY) is growing quickly, it's exposure to high-interest loans makes it vulnerable if Canada experiences an…

Read more »

Dividend Stocks

1 Small Bank Stock That Could Soar

| Kris Knutson

VersaBank (TSX:VB) might not be the biggest bank, but its quickly growing dividend, focus on financial technology, and solid operational…

Read more »

Dividend Stocks

TFSA Income Investors: Is Inter Pipeline Ltd. (TSX:IPL) or CIBC (TSX:CM) Stock a Better Dividend Pick?

| Andrew Walker

Inter Pipeline Ltd (TSX:IPL) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) recently raised their dividends and offer above-average yield. Is…

Read more »

Dividend Stocks

TSX Sale! 4 High-Quality Canadian Stocks Going Cheap

| Victoria Hetherington

There are some big-name bargains to be had on the TSX index today, including auto stock Martinrea International Inc. (TSX:MRE).

Read more »

Stocks for Beginners

Is Bank of Montreal (TSX:BMO) the Best Bank Stock for 2019?

| Andrew Walker

Bank of Montreal (TSX:BMO) (NYSE:BMO) is closing in on its 12-month high. Time to buy?

Read more »

Bank Stocks

3 Reasons You Should Hold off Buying Bank Stocks After Earnings

| Ambrose O'Callaghan

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and National Bank of Canada (TSX:NA) are risky buys after earnings season.

Read more »

Dividend Stocks

This Is 1 of the Best Dividend-Growth Stocks on the TSX

| Mat Litalien, MBA

Equitable Group Inc (TSX:EQB) is a top stock for investors. It is a triple threat offering earnings growth, value, and…

Read more »

Dividend Stocks

Why CIBC (TSX:CM) Stock Looks Undervalued Beyond Proportion

| Joey Frenette

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) could be the best buy you'll make in 2019 for your TFSA. Here's why.

Read more »

Dividend Stocks

Flagships of the TSX Index: 2 Top Stocks to Watch

| Victoria Hetherington

The performance of Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and one other stock are good indicators of the TSX index as a whole.

Read more »

Energy Stocks

The World’s Best Investors Own These 3 TSX Index Stocks

| Andrew Button

Top TSX stocks like Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR) are favourites of the world's best investors.

Read more »

Dividend Stocks

How Manulife Financial (TSX:MFC) Can Provide Long-Term Growth and Income

| Demetris Afxentiou

Manulife Financial (TSX:MFC)(NYSE:MFC) has long been viewed as a superb long-term investment option thanks to its growth in developing markets…

Read more »

Dividend Stocks

Did Royal Bank of Canada (TSX:RY) Just Become the Best Bank for Your Buck?

| Joey Frenette

Royal Bank of Canada (TSX:RY)(NYSE:RY) looked to be the winner this bank earnings season. Here's why the dividend king may…

Read more »

Dividend Stocks

Which Are the Best Stocks to Buy for Your TFSA?

| Haris Anwar

Here is why Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is one of the best stocks to keep in your TFSA.

Read more »

Stocks for Beginners

Top Pick Tuesday: Should You Buy Nutrien Ltd. (TSX:NTR) or Bank of Nova Scotia (TSX:BNS)?

| Andrew Walker

Nutrien Ltd (TSX:NTR)(NYSE:NTR) and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) just raised their dividends. Is one a better bet right now?

Read more »

Dividend Stocks

Manulife Financial (TSX:MFC) Is Targeting the Super Rich: Time to Buy the Stock?

| Andrew Button

With news that Manulife Financial (TSX:TD)(NYSE:TD) is shifting its assets to wealth management, is it finally time to buy this…

Read more »

Dividend Stocks

How Canadian Couples Can Build a $1,000,000 Retirement Fund

| Andrew Walker

Investing in stocks such as Fortis Inc. (TSX:FTS)(NYSE:FTS) and a Canadian leader can set you up for a comfortable life…

Read more »

Dividend Stocks

Bank of Montreal (TSX:BMO): A Buy and Hold Forever Dividend Stock?

| Prosper Bakiny

Bank of Montreal (TSX:BMO) (NYSE:BMO) is one of the longest dividend paying companies in Canada. How much longer can the…

Read more »

Dividend Stocks

TFSA Retirement Investors: Should You Buy Toronto-Dominion Bank (TSX:TD) Stock Right Now?

| Andrew Walker

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) just reported a rough quarter but raised its dividend by 10%. What should investors do?

Read more »

Dividend Stocks

Dividend Investors: Should CIBC (TSX) or Canadian National Railway Company (TSX:CNR) Stock Be on Your Buy List?

| Andrew Walker

Both CIBC (TSX:CM) (NYSE:CM) and Canadian National Railway Company (TSX:CNR) (NYSE:CNI) are attracting interest right now. Is one a better…

Read more »

Dividend Stocks

Dip Alert: This 6.5%-Yielding Canadian Bank Now Trades at Just 8x Earnings

| Joey Frenette

Laurentian Bank of Canada (TSX:LB) dropped the ball in its recent quarter. Should investors buy the dip?

Read more »

Bank Stocks

Should You Be Worried About Toronto-Dominion Bank (TSX:TD) Stock After Its Earnings?

| Ambrose O'Callaghan

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock dropped after its first-quarter earnings release.

Read more »

Dividend Stocks

Dangerous Traps or Value Opportunities? 4 Canadian Stocks With Low P/E Ratios

| Victoria Hetherington

Equitable Group Inc. (TSX:EQB) and three other TSX index stocks are displaying undervaluation today, but are they bargains, or should…

Read more »

Dividend Stocks

Get Growing Income from These 2 Solid Stocks

| Kay Ng

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and another quality business recently raised their dividends by more than 10%.

Read more »

Dividend Stocks

Toronto-Dominion Bank (TSX:TD) Results Reveal Trends in Canadian Banking Today

| Karen Thomas, MSc, CFA

Although it continues to raise its dividend and maintain its strong capital position, Toronto-Dominion Bank (TSX:TD)(NYSE:TD) faces many headwinds.

Read more »

Tech Stocks

1 Reason to Hold Onto BCE Inc. (TSX:BCE) and Telus Corp. (TSX:T) in March

| Ambrose O'Callaghan

BCE Inc. (TSX:BCE)(NYSE:BCE) and Telus Corp. (TSX:T)(NYSE:TU) are hoping for a resolution on the Huawei file as we move into…

Read more »

Dividend Stocks

Toronto-Dominion Bank (TSX:TD) May Have the Best Dividend on the TSX Index

| Joey Frenette

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and its dividend could make your TFSA very rich.

Read more »

Dividend Stocks

3 Reasons Toronto-Dominion Bank (TSX:TD) Stock Is an RRSP Must-Have

| Andrew Button

As the fastest-growing and most profitable of the big six banks, the Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is a must-have for RRSP…

Read more »

Dividend Stocks

Millenninal TFSA Investors: How to Grow $10,000 Into $100,000 in Just 20 Years

| Andrew Walker

Top TSX Index stocks such as Toronto Dominion Bank (TSX:TD)(NYSE:TD) and another industry leader can help young investors build significant…

Read more »

Bank Stocks

Which of These 2 Bank Stocks Should You Trust After Q1 Earnings?

| Ambrose O'Callaghan

Bank of Montreal (TSX:BMO)(NYSE:BMO) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) released their first-quarter earnings this week.

Read more »

Dividend Stocks

RRSP Investors: Load Up on These 3 Buy and Hold Forever Stocks Today

| Nelson Smith

You'll be kicking yourself a few decades from now if you don't load up on great stocks like Royal Bank…

Read more »

Dividend Stocks

Should Income Seekers Buy CIBC (TSX:CM) After its Earnings Strike Out and Dividend Hike?

| Joey Frenette

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is an income stock you won't want to sleep on. Should TFSA investors be…

Read more »

Dividend Stocks

Bank of Montreal (TSX:BMO) Is Canada’s Best Bank Stock

| Mat Litalien, MBA

It was a rough earnings season for Canada's Big Bank stocks. Lost in the pessimism, was a solid quarter by…

Read more »

Dividend Stocks

Why Toronto-Dominion Bank (TSX:TD) Shares Are Down Following Today’s Q1 Earnings Report

| Jason Phillips

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) announced a 10% increase to its quarterly dividend on Thursday, yet shares are down following its Q1…

Read more »

Dividend Stocks

4 Healthy TSX Index Dividend Stocks for a Low-Risk Investor

| Victoria Hetherington

Long-term investors might want to buy the dip with Savaria Corp. (TSX:SIS), or consider a few other solid all-rounders on…

Read more »

Dividend Stocks

Have Canadian Banks Reached Their Earning Peak for the Current Cycle?

| Haris Anwar

Canadian bank stocks, including Toronto-Dominion Bank (TSX:TD)(NYSE:TD), continue to be the strong candidates for income investors. Here is why.

Read more »

Dividend Stocks

2 Banks That Might Forecast Tough Economic Times

| Kris Knutson

Looking at quarterly reports from smaller Canadian banks like Laurentian Bank of Canada (TSX:LB) might signal upcoming tough economic times…

Read more »

Bank Stocks

Value Investors: Don’t Try to Catch This Falling Knife!

| Chris MacDonald

Now that Buffett has substantially exited his investment in Home Capital Group Inc. (TSX:HCG), what's left for value investors in terms…

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.