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

RRSP Investors: Time to Buy Fortis Inc. (TSX:FTS) or Toronto-Dominion Bank (TSX:TD) Stock?

| Andrew Walker

Fortis (TSX:FTS) (NYSE:FTS) and Toronto Dominion Bank (TSX:TD) (NYSE:TD) are two of Canada's top dividend-growth stocks. Is one a better…

Read more »

Dividend Stocks

The Risks and Rewards of Investing in Canadian Imperial Bank of Commerce (TSX:CM)

| Demetris Afxentiou

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) offers investors strong growth and income prospects, despite what long-time critics may think.

Read more »

Dividend Stocks

3 Reasons to Own the Top Canadian Banks in Your Portfolio

| Kay Ng

Royal Bank of Canada (TSX:RY)(NYSE:RY) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) make billions of dollars every year. Which should you buy now?

Read more »

The Motley Fool
Dividend Stocks

Why These Dividend Stocks Are Among the Best to Buy in 2019

| Haris Anwar

Here is why Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is one of the best dividend stocks to buy in 2019.

Read more »

Dividend Stocks

Better Buy for Your TFSA: Royal Bank of Canada (TSX:RY) or TransCanada Corp. (TSX:TRP)?

| Karen Thomas, MSc, CFA

TransCanada Corp. (TSX:TRP) (NYSE:TRP) and Royal Bank of Canada (TSX:RY) (NYSE:RY) both offer strong dividend yields and attractive dividend growth,…

Read more »

Dividend Stocks

2 Cheap Financial Stocks for Income and Dividend Growth

| Kay Ng

Manulife Financial Corporation (TSX:MFC)(NYSE:MFC) is super cheap. Buy it and another discounted stock for income and price appreciation.

Read more »

Dividend Stocks

The Top Undervalued TSX Stocks in 4 Key Canadian Industries

| Victoria Hetherington

Laurentian Bank of Canada (TSX:LB) may be the best undervalued banking stock on the TSX, but what about three other…

Read more »

Dividend Stocks

This Little-Known Bank Under $10 Will Outperform the TSX Index

| Mat Litalien, MBA

VersaBank's (TSX:VB) stock is undervalued and offers investors double-digit growth. It is underfollowed and presents investors with a great opportunity.

Read more »

Dividend Stocks

Why Toronto-Dominion Bank’s (TSX:TD) Fire-Sale Price Won’t Last Long

| Joey Frenette

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is a conviction buy this January.

Read more »

Bank Stocks

Which Is the Better Buy, CIBC (TSX:CM) or Scotiabank (TSX:BNS)?

| Amy Legate-Wolfe

If you can only choose one bank stock, should it be The Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) or Canadian Imperial…

Read more »

Dividend Stocks

Banking on Safety: Frightened Investors Should Hide in Stocks Like These!

| Victoria Hetherington

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and two other big banks represent the safest stocks on the TSX index.

Read more »

Dividend Stocks

3 RRSP Picks to Grow Your Retirement Portfolio in 2019

| Andrew Walker

BCE Inc. (TSX:BCE)(NYSE:BCE) and another two top Canadian stocks might be interesting RRSP picks right now. Here's why.

Read more »

Dividend Stocks

3 Cheap Stocks That Offer Growth and Income in 2019

| Andrew Button

Offering growth and income in one package, stocks like Canadian Tire Corp (TSX:CTC.A) can be great investments.

Read more »

Dividend Stocks

3 Dirt Cheap TSX Stocks You Can Buy Right Now

| Andrew Button

Airline stocks like Air Canada (TSX:AC) are trading at less than 10 times earnings right now

Read more »

Dividend Stocks

TFSA Shoppers: Manulife Financial (TSX:MFC) Could Power You to Riches!

| Demetris Afxentiou

Investors looking to diversify their portfolio with an income and growth-providing investment should strongly consider investing in Manulife Financial Corp.…

Read more »

Dividend Stocks

Banking Blast-Off: Why Canada’s Big 6 Banks Are About to Roar Even Louder!

| Joey Frenette

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) could be ready to roar loudly in the coming months. Here's why.

Read more »

The Motley Fool
Dividend Stocks

Is Royal Bank of Canada (TSX:RY) or Fortis Inc. (TSX:FTS) Stock a Better TFSA Pick Today?

| Andrew Walker

Royal Bank of Canada (TSX:RY)(NYSE:RY) and Fortis Inc. (TSX:FTS)(NYSE:FTS) are two Canada's top dividend stocks. Is one more attractive right…

Read more »

Dividend Stocks

3 Reasons Toronto-Dominion Bank (TSX:TD) Belongs in Your RRSP Portfolio

| Karen Thomas, MSc, CFA

Toronto-Dominion Bank (TSX:TD) (NYSE:TD) offers RRSP investors a beacon of strength, a top tier performer to drive shareholder value and…

Read more »

The Motley Fool
Stocks for Beginners

The #1 Way to Wreck Your Investments

| Kris Knutson

Buying a home with debt at high real estate prices is, at best, a terrible investment. Buy shares of Fortis…

Read more »

Dividend Stocks

Bump Stocks Like These to the Top of Your Wish List Right Now

| Victoria Hetherington

Suncor Energy Inc. (TSX:SU)(NYSE:SU) and miner Lundin Mining Corp. (TSX:LUN) are among the most defensive stocks on the TSX index.

Read more »

Dividend Stocks

Revealed: 3 Top Bank Stock Picks for 2019

| Nelson Smith

2019 is shaping up to be a nice entry point for great bank stocks like Bank of Nova Scotia (TSX:BNS)(NYSE:BNS)…

Read more »

Dividend Stocks

Is Toronto-Dominion Bank (TSX:TD) the Best Stock to Buy on the TSX?

| David Jagielski

The more Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock drops, the more attractive of a buy it becomes.

Read more »

Bank Stocks

Are These 2 Bank Stocks Poised to Hit $100 This Year?

| Ambrose O'Callaghan

Royal Bank of Canada (TSX:RY)(NYSE:RY) and Bank of Montreal (TSX:BMO)(NYSE:BMO) stocks have fallen far from 2018 highs.

Read more »

Dividend Stocks

Should Enbridge Inc. (TSX:ENB) or Toronto-Dominion Bank (TSX:TD) Stock Be on Your TFSA Buy List?

| Andrew Walker

Toronto Dominion Bank (TSX:TD)(NYSE:TD) and Enbridge Inc. (TSX:ENB)(NYSE:ENB) took big hits in 2018. Is one a buy today for your…

Read more »

Dividend Stocks

RRSP Investors: Should You Buy Canadian Imperial Bank of Commerce (TSX:CM) Right Now?

| Andrew Walker

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) has bounced off the 2018 low. Is this the right time to buy?

Read more »

Dividend Stocks

This 5-Stock Portfolio Will Make You Rich

| Demetris Afxentiou

Investors that are looking for growth and income-earning potential should strongly consider Enbridge (TSX:ENB)(NYSE:ENB) and several others for long-term gains.

Read more »

Dividend Stocks

Hot Bank Alert: This Canadian Bank Skyrocketed 20% in 3 Weeks!

| Joey Frenette

As Big Six banks like Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) flopped, this Canadian bank skyrocketed like a bat outta…

Read more »

Dividend Stocks

TFSA Retirement Investors: 3 Canadian Stocks to Own for Decades

| Andrew Walker

Here's why Telus Corporation (TSX:T)(NYSE:TU) and another two top Canadian companies are worth considering today for your TFSA.

Read more »

Dividend Stocks

Why Royal Bank of Canada (TSX:RY) Is a Top Dividend Stock

| Prosper Bakiny

Royal Bank of Canada (TSX:RY)(NYSE:RY) is one of Canada's leading banks. This is why it is also a top dividend…

Read more »

Dividend Stocks

Millennials: Top 2 Dividend Stocks to Stash This Year

| Ambrose O'Callaghan

Millennials eager to invest for the first time in 2019 should look to stocks like Royal Bank of Canada (TSX:RY)(NYSE:RY)…

Read more »

Dividend Stocks

Bigger Banking Bargain: CIBC (TSX:CM) vs. Toronto-Dominion Bank (TSX:TD)

| Joey Frenette

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) are severely undervalued, but which is a better bank for…

Read more »

The Motley Fool
Bank Stocks

Will Toronto-Dominion Bank (TSX:TD) Stock Climb Back Above $80 This Year?

| Ambrose O'Callaghan

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) has passed through a big buy signal, but investors still have time to jump in.

Read more »

The Motley Fool
Dividend Stocks

Toronto Dominion Bank’s (TSX:TD) Stock Is Canada’s Best Bank for 2019

| Mat Litalien, MBA

Looking for the perfect stock to top up your RRSP? Load up on Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock -- Canada's best…

Read more »

Dividend Stocks

3 Ways to Ensure Financial Success in 2019

| Karen Thomas, MSc, CFA

TransCanada Corporation (TSX:TRP)(NTSE:TRP) is one of three dividend-paying stocks that can help investors achieve financial success in 2019.

Read more »

Dividend Stocks

Millennials: Here’s How You Can Amass a $2 Million TFSA

| Nelson Smith

Loading up on great stocks like Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Algonquin Power and Utilities Corp (TSX:AQN)(NYSE:AQN) is the…

Read more »

Dividend Stocks

Keep Calm: Toronto-Dominion Bank (TSX:TD) Is Still a Great Dividend Investment

| Ryan Vanzo

With a reliable and growing dividend, Toronto-Dominion Bank (TSX:TD)(NYSE:TD) should be part of any income-based portfolio.

Read more »

Stocks for Beginners

Is Canadian National Railway Company (TSX:CNR) or Toronto-Dominion Bank (TSX:TD) Stock Attractive Today?

| Andrew Walker

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

Read more »

Dividend Stocks

These 3 “Boring” Stocks Turned $10,000 Into $100,000

| Nelson Smith

A small investment in Toronto-Dominion Bank (TSX:TD)(NYSE:TD), Fortis Inc. (TSX:FTS)(NYSE:FTS), and Richelieu Hardware Ltd. (TSX:RCH) turned into some pretty serious…

Read more »

Bank Stocks

2 Cheap Blue-Chip Stocks That’ll Jumpstart Your TFSA

| Amy Legate-Wolfe

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) are at such big discounts, investors really can't go wrong when…

Read more »

Dividend Stocks

3 Brilliant Moves to Make if the Market Tanks Again

| Andrew Button

Dividend stocks like Fortis Inc (TSX:FTS)(NYSE:FTS) can provide safety in down markets. But there are many other smart moves you…

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.