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

Royal Bank of Canada Is Too Big to Fail: Should You Buy?

| Andrew Walker

Royal Bank of Canada (TSX:RY)(NYSE:RY) just joined an exclusive club. Is that a good thing for investors?

Read more »

Bank Stocks

2 Ways Bank and Insurance Stocks Could Be Impacted by Housing in 2018

| Ambrose O'Callaghan

All eyes will be on Canada housing in 2018, and investors should be ready to evaluate stocks like Genworth MI…

Read more »

win
Dividend Stocks

2 Top Stocks to Own in 2018

| Karen Thomas, MSc, CFA

National Bank of Canada (TSX:NA) and Peyto Development and Exploration Corp. (TSX:PEY) are both undervalued with catalysts expected to drive…

Read more »

Bank Stocks

2 Stocks to Buy as Robo-Advisors Become More Popular

| Ambrose O'Callaghan

The rise of robo-advisors should drive investors to stocks such as Bank of Montreal (TSX:BMO)(NYSE:BMO) and Royal Bank of Canada…

Read more »

Dividend Stocks

New Investor? Build Your Portfolio Around These 3 Pillars

| David Jagielski

You can't go wrong by starting off your portfolio with Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and these two other blue-chip…

Read more »

think, plan, and act to work towards your financial goals
Dividend Stocks

Better Buy: Canadian Imperial Bank of Commerce or Bank of Montreal?

| Haris Anwar

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and Bank of Montreal (TSX:BMO)(NYSE:BMO) are the two laggards in the recent upsurge in…

Read more »

Bank Stocks

Contrarion Investors: Is Home Capital Group Inc. a Comeback Story in the Making?

| Karen Thomas, MSc, CFA

Shares rise as Home Capital Group Inc. (TSX:HCG) is taking the right steps to improvement on many fronts.

Read more »

Dividend Stocks

Why the Best-Performing Bank Stock Will Surprise You

| Ryan Goldsman

Over the next year, shareholders of Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) may be the biggest winners.

Read more »

Dividend Stocks

A High-Yield Dividend Stock I’d Buy Today

| Haris Anwar

First National Financial Corp. (TSX:FN) is a high-yield dividend stock that you might find suitable for your long-term income portfolio. Let…

Read more »

Dividend Stocks

Are Investors Missing Out on Canadian Imperial Bank of Commerce?

| Jacob Donnelly

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) has headwinds holding it back, but the potential returns on this stock are lucrative.

Read more »

Bank Stocks

Evaluating Royal Bank of Canada Ahead of Q4 Results

| Ambrose O'Callaghan

Royal Bank of Canada (TSX:RY)(NYSE:RY) is set to release its fourth-quarter results next week, and there is plenty of reason…

Read more »

The Motley Fool
Bank Stocks

Attention Dividend Investors: Danger Lies Ahead!

| Ryan Goldsman

Due to declining dividend yields, investors in Toronto-Dominion Bank (TSX:TD)(NYSE:TD) may need to be cautious over the next year.

Read more »

The Motley Fool
Dividend Stocks

Why Bank of Nova Scotia Is Now a Must-Have Holding for Your Portfolio

| Demetris Afxentiou

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is Canada’s most international bank and could spearhead international investments in a post-NAFTA world.

Read more »

The Motley Fool
Bank Stocks

Bank of Nova Scotia Is a Great International Stock, But Is it Too Pricey Today?

| Joey Frenette

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) has been on a great run of late. Is the premium multiple worth the admission?…

Read more »

Dividend Stocks

Why Canadian Imperial Bank of Commerce Remains the Best Bank Stock to Buy

| Ryan Goldsman

After a substantial acquisition, shares of Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) still trade at a discount.

Read more »

Bank Stocks

What to Expect From 4th-Quarter Earnings of the Big 5 Banks

| Susan Portelance

It's earning season, and the Big Five banks, including Toronto-Dominion Bank (TSX:TD)(NYSE:TD), will report at the end of the month.…

Read more »

The Motley Fool
Dividend Stocks

Dividend Investors: 2 Stocks to Buy and Hold for the Next 20 Years

| Haris Anwar

Canadian National Railway Company (TSX:CNR)(NYSE:CNI) is the kind of stock that dividend investors can buy and hold for a long…

Read more »

Dividend Stocks

Canadian Imperial Bank of Commerce: Should You Be Greedy While Others Are Fearful?

| Joey Frenette

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is arguably the most-feared Big Five bank stock. Is it time to take a…

Read more »

Dividend Stocks

Does Toronto-Dominion Bank Belong in Your RRSP?

| Jacob Donnelly

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) pays an ever-growing dividend, making it a smart pick for a RRSP.

Read more »

Bank Stocks

Do These Canadian Bank Stocks Have Anything Left in the Tank for 2017?

| Ambrose O'Callaghan

Shares of Toronto-Dominion Bank (TSX:TD)(NYSE:TD), Royal Bank of Canada (TSX:RY)(NYSE:RY), and Bank of Montreal (TSX:BMO)(NYSE:BMO) have experienced marginal losses since…

Read more »

Bank Stocks

Value Investors: Is Home Capital Group Inc. Stock a Buy Now?

| Haris Anwar

Here is why I think Home Capital Group Inc. (TSX:HCG) stock has started to look attractive for long-term value investors.

Read more »

Dividend Stocks

3 Warren Buffett-Like Stocks That Would Be Great Additions to Your Portfolio

| David Jagielski

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and these two other stocks present great investments, if you're looking for good fundamentals, strong growth, and reliable…

Read more »

Bank Stocks

Which Bank Stock Is up More Than 35% Since May?

| Susan Portelance

This bank stock has been on a tear in recent months. Find out just how well Canada Western Bank (TSX:CWB)…

Read more »

Dividend Stocks

TFSA Investors: These Stocks Are Poised to Hike Dividends in 2018

| Haris Anwar

Find out if stocks, such as Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), are likely to increase their dividends in 2018.

Read more »

Bank Stocks

Home Capital Group Inc.: Is the Stock Due for a Bounce?

| Joey Frenette

Home Capital Group Inc. (TSX:HCG) shares appear to be in limbo. Is it time to buy the stock as the…

Read more »

The Motley Fool
Dividend Stocks

2 Dividend Stocks to Build Income for Retirement

| Haris Anwar

Boring stocks such as BCE Inc. (TSX:BCE)(NYSE:BCE) are great for building your retirement income. Here is how.

Read more »

Bank Stocks

Equitable Group Inc. Just Increased its Dividend: Should You Buy it?

| Susan Portelance

Equitable Group Inc. (TSX:EQB) has steadily raised its dividend. Does that make it a good buy for income investors?

Read more »

Dividend Stocks

3 Stock Picks From a Bankless Mutual Fund

| Will Ashworth

It’s almost unimaginable, but there exists a Canadian dividend mutual fund that doesn’t own Royal Bank of Canada (TSX:RY)(NYSE:RY) or…

Read more »

Dividend Stocks

Bank of Montreal: Investors Should Own This Banking Stock

| Jacob Donnelly

Bank of Montreal (TSX:BMO)(NYSE:BMO) continues to generate strong earnings, and it doesn't appear that the housing market is going to…

Read more »

The Motley Fool
Bank Stocks

Canadian Bank Stocks: Time to Take Profits?

| Ambrose O'Callaghan

Shares of Toronto-Dominion Bank (TSX:TD)(NYSE:TD), Royal Bank of Canada (TSX:RY)(NYSE:RY), and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) have reached record highs…

Read more »

Bank Stocks

Fitch Ditches Canadian Imperial Bank of Commerce: Should You?

| Will Ashworth

Fitch might not like Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM), but that doesn’t make it right. Here’s why.

Read more »

Dividend Stocks

RRSP Investors: Should Fortis Inc. or Royal Bank of Canada Be a Top Pick Today?

| Andrew Walker

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

Read more »

time is money compounding
Dividend Stocks

When Is the Best Time to Buy a Stock?

| Kay Ng

Should you buy Royal Bank of Canada (TSX:RY)(NYSE:RY) or Peyto Exploration & Development Corp. (TSX:PEY) today?

Read more »

Dividend Stocks

Only 2 months Left for Free Money!

| Ryan Goldsman

With momentum running in the right direction, shares of Canadian Western Bank (TSX:CWB) may only be getting started!

Read more »

win
Dividend Stocks

How to Benefit From the Rally in the Best Canadian Dividend Stocks

| Haris Anwar

Here is why Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and Bank of Montreal (TSX:BMO)(NYSE:BMO) are the best dividend stocks for…

Read more »

Energy Stocks

Should Suncor Energy Inc. or Toronto-Dominion Bank Be in Your RRSP Today?

| Andrew Walker

Suncor Energy Inc. (TSX:SU)(NYSE:SU) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) are two of Canada's top companies. Is one attractive for your retirement…

Read more »

Bank Stocks

Equal Weighting Banks: It’s the Only Way to Go

| Will Ashworth

If you’re going to own Royal Bank of Canada (TSX:RY)(NYSE:RY) or one of the other Canadian bank stocks, history suggests…

Read more »

Dividend Stocks

TFSA Investors: 2 Dividend Stocks to Buy in November

| Andrew Walker

Here's why Suncor Energy Inc. (TSX:SU)(NYSE:SU) and another stock look attractive.

Read more »

Bank Stocks

Bank of Montreal: A Dividend King for Your RRSP

| Haris Anwar

Here is why Bank of Montreal (TSX:BMO)(NYSE:BMO) stock is a good candidate for your RRSP portfolio.

Read more »

Dividend Stocks

2 Top Dividend Stocks to Own in Your Retirement Income Fund

| Haris Anwar

Here is why Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Telus Corporation (TSX:T)(NYSE:TU) are two top dividend stocks for your retirement income.

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.