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

Monthly Income: 2 Dividend-Growth Stocks to Buy Today

| Haris Anwar

Inter Pipeline Ltd. (TSX:IPL) and First National Financial Corp. (TSX:FN) are two dividend-growth stocks for your monthly income portfolio.

Read more »

Dividend Stocks

RRSP Investors: Should You Buy Toronto-Dominion Bank or Canadian Imperial Bank of Commerce Today?

| Andrew Walker

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) are two of Canada's top companies. Is one a buy…

Read more »

The Motley Fool
Bank Stocks

3 Reasons Toronto-Dominion Bank Should Be in Your TFSA

| Ambrose O'Callaghan

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock offers up great prospects for investors looking for the right long-term addition to their TFSAs.

Read more »

Dividend Stocks

TSX Composite Index Dips Below 15,000: Which Stocks Should You Buy?

| Andrew Walker

Here's why Enbridge Inc. (TSX:ENB)(NYSE:ENB) and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) should be on your radar.

Read more »

The Motley Fool
Dividend Stocks

Buy Manulife Financial Corp., Get International Growth

| Demetris Afxentiou

Manulife Financial Corp. (TSX:MFC)(NYSE:MFC) continues to see considerable growth fueled by the company’s international expansion.

Read more »

Dividend Stocks

Why Bank of Montreal Is a Great Investment Right Now

| Demetris Afxentiou

Bank of Montreal (TSX:BMO)(NYSE:BMO) is an established bank that offers investors massive growth prospects in addition to a strong dividend.

Read more »

Bank Stocks

Canadian Imperial Bank of Commerce Is “Simplii” the Best

| Will Ashworth

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is the latest Canadian bank to take the discount plunge. Shareholders ought to like…

Read more »

Dividend Stocks

New Investors: How to Build a Dividend Portfolio

| Kay Ng

Do you want to benefit from growing income and steady price appreciation? Start with your first quality stock, such as…

Read more »

Dividend Stocks

Retirement Income: 5 Dividend-Growth Stocks to Buy Before You Retire

| Haris Anwar

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Enbridge Inc. (TSX:ENB)(NYSE:ENB) are some of the best dividend-growth stocks for your retirement income.

Read more »

The Motley Fool
Bank Stocks

Profit From Interest Rate Hikes With Bank of Nova Scotia

| Demetris Afxentiou

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) has thrived in a low interest rate environment and is poised to fare even better…

Read more »

The Motley Fool
Dividend Stocks

Cash In on Higher Interest Rates by Buying Toronto-Dominion Bank

| Matt Smith

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) will benefit from higher interest rates.

Read more »

Dividend Stocks

Higher Interest Rates: Are They Good or Bad for Canadian Lenders?

| Jason Phillips

It didn’t take lenders long to follow the Canadian central bank, raising the prime rate to 2.95%. But is the…

Read more »

The Motley Fool
Dividend Stocks

TFSA Investors: 2 Dividend-Growth Stocks on Sale

| Haris Anwar

RioCan Real Estate Investment Trust (TSX:REI.UN) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM),r attractive valuations for TFSA investors.

Read more »

The Motley Fool
Energy Stocks

Should You Own Suncor Energy Inc. or Toronto-Dominion Bank in Your TFSA Retirement Fund?

| 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 a better bet today?

Read more »

Bank Stocks

Bank of Montreal Is Down 5% in 1 Month: Time to Buy?

| Jacob Donnelly

Bank of Montreal (TSX:BMO)(NYSE:BMO) is down 5% from a month ago, making it a great opportunity to get a strong…

Read more »

The Motley Fool
Dividend Stocks

2 Attractive Dividend Stocks That Could Double Your Investment

| Haris Anwar

Enbridge Inc. (TSX:ENB)(NYSE:ENB) and First National Financial Corp. (TSX:FN) are two attractive dividend stocks to double your investment.

Read more »

The Motley Fool
Dividend Stocks

Apple Inc. Is Taking Advantage of Canada’s Low Rates: Should You, Too?

| Haris Anwar

Apple Inc.'s (NASDAQ:AAPL) bond deal in Canada reminds investors about opportunities available in a low-rate environment. Canadian Imperial Bank of…

Read more »

The Motley Fool
Dividend Stocks

2 Top Dividend Stocks on Sale

| Haris Anwar

Top dividend stocks such as Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) are on sale amid weakness in bank stocks.

Read more »

The Motley Fool
Dividend Stocks

Dividend-Paying Stocks: Should You Hold Them in Your TFSA or RSP?

| Susan Portelance

Should you hold dividend-paying stocks such as Toronto Dominion Bank (TSX:TD)(NYSE:TD) in your TFSA or RSP?

Read more »

Dividend Stocks

Canadian Imperial Bank of Commerce: Smart Investors Getting Bullish. Should You?

| Haris Anwar

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is one of the best candidates to benefit from higher interest rates.

Read more »

Bank Stocks

Home Capital Group Inc.: New Management Team, New Results?

| Chris MacDonald

Will recent moves made by Home Capital Group Inc.'s (TSX:HCG) management team be enough to satisfy investor concerns?

Read more »

Dividend Stocks

RRSP Investors: 2 Canadian Dividend Stocks to Own for 20 Years

| Andrew Walker

Royal Bank of Canada (TSX:RY)(NYSE:RY) and Canadian National Railway Company (TSX:CNR)(NYSE:CNI) have delivered big gains to buy-and-hold investors.

Read more »

The Motley Fool
Dividend Stocks

TFSA Investors: 2 Dividend-Growth Stocks Set to Soar as Interest Rates Climb

| Joey Frenette

Solid dividend-growth kings, such as Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM), will be beneficiaries of rising interest rates. Here's why…

Read more »

The Motley Fool
Dividend Stocks

The Last Time Interest Rates Increased, This ETF Rose 50% in a Year

| David Jagielski

The last time there was a rate hike, bank stocks such as Toronto-Dominion Bank (TSX:TD)(NYSE:TD) didn't do all that well, but…

Read more »

The Motley Fool
Bank Stocks

Latest Rate Hike Boosts the Attractiveness of Bank of Nova Scotia

| Matt Smith

The latest rate hike makes now the time to buy Bank of Nova Scotia (TSX:BNS)(NYSE:BNS).

Read more »

The Motley Fool
Dividend Stocks

TFSA Investors: 5 Canadian Dividend Stocks to Own as Interest Rates Increase

| Andrew Walker

Here's why Sun Life Financial Inc. (TSX:SLF)(NYSE:SLF) and four other top Canadian stocks should be on your radar today.

Read more »

time is money compounding
Bank Stocks

Is Now the Time to Buy Home Capital Group Inc.?

| Matt Smith

Despite its brush with the corporate undertaker, Home Capital Group Inc. (TSX:HCG) is becoming an increasingly attractive investment.

Read more »

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

Combat Rising Interest Rates With These 2 Great Investments

| Demetris Afxentiou

Toronto Dominion Bank (TSX:TD)(NYSE:TD) and Manulife Financial Corp. (TSX:MFC)(NYSE: MFC) pose a unique opportunity for investors looking to capitalize on…

Read more »

Bank Stocks

3 Factors That Could Sink Home Capital Group Inc.’s Stock Again

| Haris Anwar

Home Capital Group Inc. (TSX:HCG) shares may sink again if this mortgage rule is implemented.

Read more »

The Motley Fool
Bank Stocks

2 Reasons Royal Bank of Canada Deserves Your Attention

| Ambrose O'Callaghan

Royal Bank of Canada (TSX:RY)(NYSE:RY) settles U.S. litigation and makes a big announcement regarding a leap in technology.

Read more »

The Motley Fool
Bank Stocks

Toronto-Dominion Bank: The Best Bargain of the Big 5?

| Joey Frenette

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is one of the highest-quality dividend-growth stocks on the TSX, and here's why it's the best bargain…

Read more »

Dividend Stocks

Housing Bubble: Should Investors Be Worried About Canadian Banks?

| Haris Anwar

Here is why Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is more exposed to Canadian housing bubble.

Read more »

dividends
Dividend Stocks

3 Top Dividend Stocks on Sale

| Jason Phillips

These three stocks, including Home Capital Group (TSX:HCG) offer an attractive mix of dividend income with the potential for sizeable…

Read more »

retired life
Dividend Stocks

Retired? 3 Stocks You Might Want to Buy

| Jason Phillips

These three stocks, including Enbridge Inc. (TSX:ENB)(NYSE:ENB), pay reasonable dividend yields and operate in stable industries, meaning the risk of…

Read more »

Bank Stocks

This Big 5 Bank Has a History of Value and Dividend Increases

| Brad Macintosh

When you look at its dividend rate (4.75%), dividend history (>20 years), and dividend-payout ratio (

Read more »

The Motley Fool
Bank Stocks

Better Buy: Toronto-Dominion Bank vs. Bank of Nova Scotia

| Ambrose O'Callaghan

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) hope to beat expectations again ahead of third-quarter earnings.

Read more »

Bank Stocks

Smart Investors Should Probably Avoid This Canadian Bank

| Joey Frenette

Canadian Western Bank (TSX:CWB) may seem cheap, but here's why investors won't get the superior returns of the Big Six…

Read more »

Bank Stocks

Home Capital Group Inc.: Boom or Bust?

| Chris MacDonald

How will Canadian alternative lenders such as Home Capital Group Inc. (TSX:HCG) fare after the new regulations put in place by…

Read more »

The Motley Fool
Energy Stocks

New RRSP Investors: Should You Own Bank of Nova Scotia or Enbridge Inc.?

| Andrew Walker

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Enbridge Inc. (TSX:ENB)(NYSE:ENB) are two of Canada's top companies. Is one more attractive right…

Read more »

Dividend Stocks

2 Dividend-Growth Stocks to Bet on Rising Interest Rates

| Haris Anwar

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and CI Financial Corp. (TSX:CIX) are two dividend-growth stocks to bet on Canada's rising interest rates.

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.