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

The Motley Fool
Dividend Stocks

3 TFSA Superstar Stocks Trading at a Deep Discount

| Victoria Hetherington

Three of the best dividend stocks on the TSX have huge discounts right now. Here’s why Exco Technologies Ltd. (TSX:XTC)…

Read more »

Bank Stocks

Is Bank of Montreal a Buy?

| Andrew Walker

Bank of Montreal (TSX:BMO) (NYSE:BMO) might be the Goldilocks pick among the Canadian banks.

Read more »

Dividend Stocks

A Top Dividend Stock to Buy and Then Forget

| Haris Anwar

Here is why Royal Bank of Canada (TSX:RY)(NYSE:RY) is a top dividend stock to buy and then never sell.

Read more »

Dividend Stocks

A Dividend Growth Stock to Charge Your TFSA

| Haris Anwar

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

Read more »

The Motley Fool
Dividend Stocks

Does Bank of Nova Scotia (TSX:BNS) Stock Offer the Best Value Among the Canadian Banks Right Now?

| Jason Phillips

Following a recent pullback, is Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) stock now offering investors the best value among the Canadian…

Read more »

Dividend Stocks

Is Buy and Hold Still a Good Investing Strategy?

| Kay Ng

Investing in Toronto-Dominion Bank (TSX:TD)(NYSE:TD) for the long term will be fine, but be careful about other stocks that you…

Read more »

Dividend Stocks

Betting on This Top Dividend Stock Is Worth the Risk

| Haris Anwar

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), a top dividend stock, is a bet worth taking after its 8% slide this year.

Read more »

Dividend Stocks

The 4-Stock Portfolio to Coast Into Retirement With

| Demetris Afxentiou

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI) are among the investments that could help build a sizable retirement income…

Read more »

Bank Stocks

Millennials: 3 Stocks to Stash in Your TFSA

| Ambrose O'Callaghan

Millennials should look to stocks like Royal Bank of Canada (TSX:RY)(NYSE:RY) as they look to adopt new investment strategies in…

Read more »

Dividend Stocks

How Long Will it Take to Double Your Money?

| Kay Ng

A sure and safe way to double your money is to invest in stocks such as National Bank of Canada…

Read more »

Dividend Stocks

Toronto-Dominion Bank (TSX:TD) Is Now Canada’s Top Banking Stock

| Victoria Hetherington

The Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is Canada's premium banking stock, and pays a good dividend. But why else are TD stocks…

Read more »

Dividend Stocks

Toronto-Dominion Bank (TSX:TD) Stock Is Still a Tremendous Opportunity

| Kay Ng

Buy Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock now and on dips if you’re looking for quality and growth in the financial sector.

Read more »

Dividend Stocks

2 Top Dividend Stocks to Fuel Growth in Your Retirement Income

| Haris Anwar

Enbridge Inc. (TSX:ENB)(NYSE:ENB) is among the top dividend stocks that could help you to generate solid retirement income.

Read more »

Bank Stocks

Is Laurentian Bank of Canada or National Bank of Canada a Buy?

| Andrew Walker

Laurentian Bank of Canada (TSX:LB) and National Bank of Canada (TSX:NB) are off the radar of most bank investors. Do…

Read more »

Dividend Stocks

Should Canadian Imperial Bank of Commerce (TSX:CM) Stock Be on Your Buy List?

| Andrew Walker

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) trades at a discount to its larger peers. Is the market pricing the stock…

Read more »

Dividend Stocks

National Bank (TSX:NA) or Bank of Montreal (TSX:BMO): Which Is the Better Bank Stock?

| Ambrose O'Callaghan

The Quebec economy is at risk due to U.S. protectionism but that doesn’t mean investors should shy away from Bank…

Read more »

Dividend Stocks

Is There Ever a Wrong Time to Buy the Top Canadian Banks?

| Kay Ng

Should you buy Royal Bank of Canada (TSX:RY)(NYSE:RY) now, or is it better to wait?

Read more »

Bank Stocks

Bank of Montreal (TSX:BMO) Stock Is Nearing an All-Time High: Is it a Buy Today?

| Ambrose O'Callaghan

Bank of Montreal (TSX:BMO)(NYSE:BMO) is recovering from a data breach while the stock has shown very solid momentum.

Read more »

post-its with the focus on one saying "Make Things Happen"
Dividend Stocks

These Two Industry Heavyweights Are Teaming Up to Fill a Big Void

| Mat Litalien, MBA

Westjet Airlines Ltd. (TSX:WJA) and Royal Bank of Canada (TSX:RY)(NYSE:RY) are teaming up to launch Ampli, a new loyalty program.

Read more »

The Motley Fool
Bank Stocks

Contrarian Investors: Is It Time to Buy Bank of Nova Scotia?

| Andrew Walker

Bank of Nova Scotia (TSX:BNS) (NYSE:BNS) is close to a 12-month low. Is it the stock oversold?

Read more »

Bank Stocks

Mortgages Are Declining: Is a Crash Around the Corner?

| David Jagielski

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) has been able to produce strong results, even with tighter mortgage rules in place. Will that trend continue?

Read more »

Dividend Stocks

A Value Dividend Stock You Can Safely Own in Your TFSA

| Haris Anwar

Here is why Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) offers a good value for TFSA investors who want to earn…

Read more »

Dividend Stocks

TFSA Investors: 3 Top Canadian Dividend Stocks to Start a Retirement Fund

| Andrew Walker

Here's why Royal Bank of Canada (TSX:RY)(NYSE:RY) and another two market leaders deserve to be on your radar.

Read more »

The Motley Fool
Dividend Stocks

2 Dividend Growth Stocks to Buy and Never Sell

| Haris Anwar

Bank of Montreal (TSX:BMO)(NYSE:BMO) and Enbridge Inc.(TSX:ENB)(NYSE:ENB) are two dividend-growth stocks that could multiply your retirement wealth.

Read more »

Dividend Stocks

Retirement Planners: Is Toronto-Dominion Bank a Top Stock to Create TFSA Wealth?

| Andrew Walker

Toronto-Dominion Bank (TSX:TD) (NYSE:TD) has generated some impressive returns for buy-and-hold investors. Is this the time to buy?

Read more »

Dividend Stocks

When Should You Sell a Stock?

| Kay Ng

When should you sell stocks, such as Kinaxis Inc. (TSX:KXS) and Katanga Mining Ltd. (TSX:KAT)?

Read more »

Bank Stocks

Canadian Banks: Brace Yourself for Another Headwind

| Mat Litalien, MBA

Issues in the Caribbean can impact the two worst-performing banks: Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and Bank of Nova…

Read more »

The Motley Fool
Bank Stocks

Here Is Why Toronto-Dominion Bank (TSX:TD) Stock Is Still a Buy Heading Into the Summer

| Ambrose O'Callaghan

There are a number of reasons to remain bullish on Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock, even as it hovers around all-time…

Read more »

Dividend Stocks

1 Thing You Must Do Right When Investing in Stocks

| Kay Ng

Why investing in Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) for the long run is probably the right thing to do.

Read more »

Dividend Stocks

2 Top Dividend Stocks You Can Safely Stash in Your TFSA

| Haris Anwar

BCE Inc. (TSX:BCE)(NYSE:BCE) and Royal Bank of Canada (TSX:RY)(NYSE:RY) are two top dividend stocks you safely include in your TFSA.

Read more »

Dividend Stocks

2 Top Canadian Dividend-Growth Stocks to Build RRSP Wealth

| Andrew Walker

Here's how companies such as Fortis Inc. (TSX:FTS)(NYSE:FTS) and Canadian National Railway (TSX:CNR)(NYSE:CNI) can help you save some serious cash…

Read more »

Dividend Stocks

Toronto-Dominion Bank (TSX:TD): Is This Stock a Top Pick to Launch Your TFSA?

| Andrew Walker

Toronto-Dominion Bank (TSX:TD) (NYSE:TD) has made some long-term investors quite wealthy.

Read more »

The Motley Fool
Dividend Stocks

3 Reasons Why You Should Buy Bank of Nova Scotia (TSX:BNS) Today

| Kris Knutson

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is an excellent bank for dividend investors to own. Its international operations and excellent financial…

Read more »

Dividend Stocks

The Top 10 Canadian Stocks Ranked by Overall Strength

| Victoria Hetherington

Transcontinental Inc. (TSX:TCL.A) heads up a list of the 10 strongest stocks on the TSX, analyzed for income, track record,…

Read more »

The Motley Fool
Dividend Stocks

2 Top Canadian Dividend Stocks to Help Build Retirement Wealth in Your TFSA

| Andrew Walker

Here's why Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Suncor Energy Inc. (TSX:SU)(NYSE:SU) deserve a closer look today.

Read more »

Dividend Stocks

2 Top Dividend Stocks to Buy and Hold for Life

| Haris Anwar

Here is how buying and holding top dividend stocks, such Toronto-Dominion Bank (TSX:TD)(NYSE:TD), helps investors grow their wealth.

Read more »

Dividend Stocks

An Undervalued Banking Stock That’s About to Trade Ex-Dividend

| Victoria Hetherington

Laurentian Bank of Canada (TSX:LB) is deeply discounted and nearing its ex-dividend date. Should you buy this undervalued stock now…

Read more »

Dividend Stocks

2 Top Stocks to Help Build Your Retirement Wealth

| Haris Anwar

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is one of the two top dividend stocks which investors can buy to build their…

Read more »

The Motley Fool
Bank Stocks

Are Investors Focusing Too Much on the Short Term?

| David Jagielski

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is a great long-term buy, so why isn't it traded at a higher price-to-earnings ratio?

Read more »

Dividend Stocks

Bank of Nova Scotia (TSX:BNS) Remains a Buy Despite the Turmoil in Emerging Markets

| Matt Smith

Second-quarter 2018 results indicate there is a strong year ahead for Bank of Nova Scotia (TSX:BNS)(NYSE:BNS).

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.