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

Should Royal Bank of Canada (TSX:RY) or Canadian Imperial Bank of Commerce (TSX:CM) Stock Be in Your RRSP?

| Andrew Walker

Royal Bank of Canada (TSX:RY) (NYSE:RY) and Canadian Imperial Bank of Commerce (TSX:CM) (NYSE:CM) are generating impressive results. Is one…

Read more »

Dividend Stocks

3 Top Canadian Dividend Stocks for New TFSA Investors

| Andrew Walker

Here's why Bank of Montreal (TSX:BMO) (NYSE:BMO) and another two top Canadian dividend stocks deserve to be on your radar.

Read more »

Dividend Stocks

Which of Canada’s Largest Banks Should You Buy Right Now?

| Kay Ng

Which of the biggest Canadian banks, including Toronto-Dominion Bank (TSX:TD)(NYSE:TD), should you consider today?

Read more »

The Motley Fool
Dividend Stocks

2 Dividend-Growth Stocks to Buy and Hold in Your TFSA

| Haris Anwar

Enbridge Inc. (TSX:ENB)(NYSE:ENB) is one of two dividend-growth stocks that TFSA investors could find attractive at current prices.

Read more »

Dividend Stocks

Here Are 3 TFSA Dividend-Growth Investments You Can Bank On

| Kris Knutson

Canadian banks such as the Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) are excellent TFSA investments since they offer a combination of…

Read more »

Dividend Stocks

Is Mirroring the Market an Outdated Strategy?

| David Jagielski

The TSX has been dreadful this year, and you may just be better off putting your money into Toronto-Dominion Bank (TSX:TD)(NYSE:TD)…

Read more »

Bank Stocks

Buy This Top Canadian Bank Stock if You Want to Take Advantage of a Booming U.S. Economy

| Ambrose O'Callaghan

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) has seen its U.S. business post fantastic results in the wake of tax reform.

Read more »

Bank Stocks

Scoop up These 2 Deeply Discounted Value Stocks While They’re at 52-Week Lows

| Joey Frenette

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and one other discounted stock that value investors should back up the truck on.

Read more »

Dividend Stocks

Young Investors: 2 Reliable Canadian Dividend Stocks to Start Your TFSA Retirement Fund

| Andrew Walker

Here's how investing in top dividend stocks, such as Royal Bank of Canada (TSX:RY) (NYSE:RY), can help young investors put…

Read more »

Dividend Stocks

Forget Royal Bank of Canada (TSX:RY)! There’s a New King in Canadian Banking

| Joey Frenette

Why Royal Bank of Canada's (TSX:RY)(NYSE:RY) days at the top are numbered.

Read more »

Dividend Stocks

This Bank Stock Could Be the Best Bargain on the TSX

| Kenrick Vassall

Long-term value investors looking for bargain stocks with great dividends should consider Laurentian Bank of Canada (TSX:LB).

Read more »

Bank Stocks

Better Addition to Your TFSA Today: Bank of Montreal (TSX:BMO) or Toronto-Dominion Bank (TSX:TD) Stock?

| Ambrose O'Callaghan

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Bank of Montreal (TSX:BMO)(NYSE:BMO) have been premier performers among Canadian bank stocks.

Read more »

Dividend Stocks

These Banks Offer the Greatest Dividend Income Right Now

| Kay Ng

Should you scoop up some Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) stock now for a 4.5% dividend yield?

Read more »

growing dividends
Dividend Stocks

3 Quality High-Growth Stocks to Buy for Capital Gains

| Victoria Hetherington

Gluskin Sheff + Associates (TSX:GS) and two other stocks match high growth with quality to offer capital gains plus some…

Read more »

Compass pointing towards 'best price'
Dividend Stocks

3 Beaten-Down Bargain Stocks for the Rest of September

| Brian Pacampara, CFA

Margin of safety is the key concept of sound investing. These three stocks, including Laurentian Bank of Canada (TSX:LB), could…

Read more »

Dividend Stocks

3 Stocks to Buy and Hold for the Next 50 Years

| Kay Ng

Buying and holding great businesses, such as Alimentation Couche-Tard Inc. (TSX:ATD.B) and two others, is one of the best ways…

Read more »

Stocks for Beginners

TFSA Investors: 2 Rising Stocks with Big Upside Potential

| Andrew Walker

Here's why Alimentation Couche-Tard (TSX:ATD.B) and another top Canadian stock deserve to be on your radar today.

Read more »

Dividend Stocks

Royal Bank Stock (TSX:RY) Remains a King Among Men

| Chris MacDonald

As far as safety and long-term risk-adjusted returns go, Royal Bank of Canada (TSX:RY)(NYSE:RY) has proven itself to be simply one…

Read more »

Dividend Stocks

Moody’s Just Revised its Outlook on the Canadian Banking System: Here’s What You Need to Know

| Brian Pacampara, CFA

Here's why Moody's has a revised outlook on Canadian banks, including Royal Bank of Canada (TSX:RY)(NYSE:RY).

Read more »

Dividend Stocks

Time to Buy Canadian Imperial Bank of Commerce (TSX:CM) Stock?

| Andrew Walker

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is approaching its all-time high. Should this stock be in your portfolio?

Read more »

Dividend Stocks

This Bank Stock Is Down 20% Year to Date: Buy the Dip?

| Stephanie Bedard-Chateauneuf, MBA

Laurentian Bank of Canada (TSX:LB) stock has been on a downward trend for several months and has plunged sharply after…

Read more »

Dividend Stocks

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

| Andrew Button

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) shares have solid income, cheap valuation and strong growth.

Read more »

Dividend Stocks

2 Canadian Dividend Stocks That Are Best for Income Growth

| Haris Anwar

Brookfield Infrastructure Partners L.P. (TSX:BIP.UN)(NYSE:BIP) is one of the two Canadian stocks that are primed for a long-term dividend growth.

Read more »

Dividend Stocks

2 Standout Stocks to Benefit From Bullishness in Banking and Oil

| Victoria Hetherington

Bank of Montreal (TSX:BMO)(NYSE:BMO) and an energy favourite look set to rise on investor bullishness.

Read more »

Bank Stocks

What’s the Best Investing Strategy for Millennials?

| Andrew Button

High-growth stocks like Canopy Growth Corp (TSX:WEED) are popular with millennials. Are they making the right choice?

Read more »

Dividend Stocks

5 Top Dividend Stocks to Buy in September

| Stephanie Bedard-Chateauneuf, MBA

If you are on the lookout for dividend stocks to buy, I suggest to you five great dividend stocks, including…

Read more »

The Motley Fool
Dividend Stocks

3 Top Stocks You Can Buy and Hold for the Next Decade

| Kay Ng

Looking to build wealth with long-term investments in quality stocks? Start with Open Text Corp. (TSX:OTEX)(NASDAQ:OTEX) and these stocks.

Read more »

Bank Stocks

The TSX Index Is Down 100 Points to Start the Week: 3 Warning Signals That Are Flashing Red

| Jason Phillips

With the TSX Index down 100 points in Tuesday's trading. Investors ought to be paying attention to these warning signals…

Read more »

Dividend Stocks

TFSA Investors: These 3 Dividend Stocks Are Beating the TSX Index in 2018

| Jason Phillips

These three blue-chip dividend stocks, including TransCanada Corporation (TSX:TRP)(NYSE:TRP), continue to impress. Learn why they have been outperforming the TSX…

Read more »

The Motley Fool
Stocks for Beginners

Real Estate Investors: Should You Buy the Income Property or the Bank?

| Andrew Walker

Will stocks like Toronto Dominion Bank (TSX:TD)(NYSE:TD) or income properties generate better returns in the coming years?

Read more »

Dividend Stocks

Mortgages Issues Resolved, This Bank Has 35% Upside

| Mat Litalien, MBA

Laurentian Bank of Canada (TSX:LB) has completed its mortgage review and expectations were inline with guidance. Laurentian Bank's stock has…

Read more »

Bank Stocks

3 Value Stocks I’d Buy Today

| David Jagielski

Magna International Inc. (TSX:MG)(NYSE:MGA) and these two other stocks trade at modest multiples and have great potential upside.

Read more »

Dividend Stocks

Which of the Big 5 Banks Performed Best in Q3?

| Stephanie Bedard-Chateauneuf, MBA

On August 30, Toronto-Dominion Bank (TSX:TD)(NYSE:TD) closed a bullish Q3 earnings season for Canada's five biggest banks. Which bank had…

Read more »

The Motley Fool
Dividend Stocks

Retirees Beware: This Common, Insidious Mistake Could Cost You Your Retirement!

| Joey Frenette

Why retirees should avoid the this common, insidious route and opt for alternative investment vehicles, like Bank of Montreal's (TSX:BMO)(NYSE:BMO)…

Read more »

Dividend Stocks

This Underestimated Bank Posts Another Strong Quarter

| Stephanie Bedard-Chateauneuf, MBA

National Bank of Canada (TSX:NA) stock has soared 18% over one year, but it is slowing down, even after a…

Read more »

The Motley Fool
Dividend Stocks

Are These Canada’s Best Unsung High-Yield Dividend Stocks?

| Victoria Hetherington

Centamin PLC (TSX:CEE) is the high-yield gold stock you didn't know you needed. Are these other two dividend stocks must-buys…

Read more »

Energy Stocks

3 Dividend-Growth Stocks to Help You Retire Early

| Andrew Walker

Here's how Toronto Dominion Bank (TSX:TD)(NYSE:TD) and another two top dividend payers can help investors meet their retirement goals.

Read more »

Bank Stocks

Why the Canadian Banks Are Poised to Reach All-time Highs After This Earnings Season

| Victoria Matsepudra

A strong economy and rising interest rates bode well for major banks like Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM).

Read more »

Dividend Stocks

Toronto-Dominion Bank (TSX:TD) Posts a Strong Q3 Thanks to Strong Growth in the U.S.

| David Jagielski

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) isn't getting much love from investors despite a solid performance in its most recent quarterly earnings.

Read more »

The Motley Fool
Dividend Stocks

3 Top Canadian Dividend Stocks With U.S. Exposure

| Andrew Walker

Here's why Bank of Montreal (TSX:BMO)(NYSE:BMO) and another two top Canadian picks deserve to be on your radar.

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.