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

7 Dividend Stocks for New Investors

| Kay Ng

New to investing? Here are seven high-quality, stable dividend payers for your portfolio, including Royal Bank of Canada (TSX:RY)(NYSE:RY) and…

Read more »

The Motley Fool
Dividend Stocks

Canadian Western Bank: Priced Cheaply for Substantial Returns

| Kay Ng

Canadian Western Bank (TSX:CWB) is discounted by 38% compared with historical trading levels. The low oil-price environment has dragged it…

Read more »

The Motley Fool
Bank Stocks

2 Hot Dividend Stocks That Are Just Warming Up

| Andrew Walker

Here's why Rogers Communication Inc. (TSX:RCI.B)(NYSE:RCI) and Sun Life Financial Inc. (TSX:SLF)(NYSE:SLF) are top picks right now.

Read more »

The Motley Fool
Dividend Stocks

2 Top TFSA Picks for Retirees

| Andrew Walker

Here's why Fortis Inc. (TSX:FTS) and Bank of Montreal (TSX:BMO)(NYSE:BMO) are reliable picks for income investors.

Read more »

The Motley Fool
Bank Stocks

3 Reasons to Invest in Royal Bank of Canada Today

| Joseph Solitro

Here are three reasons why Royal Bank of Canada (TSX:RY)(NYSE:RY) could outperform the overall market going forward.

Read more »

The Motley Fool
Bank Stocks

Buy Toronto-Dominion Bank to Benefit From the Coming U.S. Interest Rate Hike

| Adam Mancini

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is set to see its earnings expand considerably when the U.S. Federal Reserve boosts its benchmark rate.…

Read more »

The Motley Fool
Bank Stocks

Is Bank of Nova Scotia or Canadian Imperial Bank of Commerce a Better Long-Term Bet?

| Andrew Walker

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) are trading at attractive valuations, but one is…

Read more »

The Motley Fool
Dividend Stocks

2 Stocks to Help Retirees Start an Income Portfolio

| Andrew Walker

Here's why Royal Bank of Canada (TSX:RY)(NYSE:RY) and Telus Corporation (TSX:T)(NYSE:TU) are top picks.

Read more »

The Motley Fool
Bank Stocks

3 Reasons Why Canadian Western Bank Could Outperform the Market

| Joseph Solitro

Canadian Western Bank (TSX:CWB) could widely outperform the overall market going forward for three primary reasons. Is now the time…

Read more »

Dividend Stocks

2 Dividend-Growth Stocks for New Investors

| Andrew Walker

Here's why Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Telus Corporation (TSX:TU)(NYSE:TU) are top picks to start your portfolio.

Read more »

The Motley Fool
Bank Stocks

Should Investors Buy Bank of Montreal or Canadian Imperial Bank of Commerce?

| Andrew Walker

Bank of Montreal (TSX:BMO)(NYSE:BMO) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) are both trading at attractive prices, but one is…

Read more »

The Motley Fool
Bank Stocks

Buy Bank of Nova Scotia Despite Recent Short-Term Headwinds

| Matt Smith

The recent decline in Bank of Nova Scotia's (TSX:BNS)(NYSE:BNS) share price has created an attractive entry point for investors seeking…

Read more »

The Motley Fool
Bank Stocks

3 Reasons to Buy Laurentian Bank of Canada Today

| Joseph Solitro

Laurentian Bank of Canada (TSX:LB) could widely outperform the overall market going forward for three primary reasons. Should you buy…

Read more »

The Motley Fool
Bank Stocks

Canadian Imperial Bank of Commerce or National Bank of Canada: Which Is the Better Buy Today?

| Joseph Solitro

Does Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) or National Bank of Canada (TSX:NA) represent the better investment opportunity today?

Read more »

Dividend Stocks

If You Want Safe Dividends, Toronto-Dominion Bank Is a No-Brainer

| Benjamin Sinclair

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) has a rock-solid 3.9% yield.

Read more »

The Motley Fool
Bank Stocks

Bank of Nova Scotia Is a Bargain at Under $60 Per Share

| Benjamin Sinclair

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) has seen its stock price fall more than 20% in the last year. It's now…

Read more »

The Motley Fool
Bank Stocks

Is it Time to Buy Royal Bank of Canada?

| Andrew Walker

Here's what investors need to know about the current situation at Royal Bank of Canada (TSX:RY)(NYSE:RY).

Read more »

The Motley Fool
Bank Stocks

Should You Buy Toronto-Dominion Bank Right Now?

| Andrew Walker

Here's why Toronto-Dominion Bank (TSX:TD)(NYSE:TD) still looks attractive.

Read more »

The Motley Fool
Dividend Stocks

Bank of Nova Scotia or Bank of Montreal: Which Should You Buy Today?

| Joseph Solitro

Does Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) or Bank of Montreal (TSX:BMO)(NYSE:BMO) represent the better buy today?

Read more »

The Motley Fool
Dividend Stocks

3 Reasons to Buy Canadian Imperial Bank of Commerce Right Now

| Joseph Solitro

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) could outperform the overall market going forward for three primary reasons.

Read more »

The Motley Fool
Bank Stocks

Toronto-Dominion Bank vs. Royal Bank of Canada: Which Is More Recession-Proof?

| Adam Mancini

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Royal Bank of Canada (TSX:RY)(NYSE:RY) are Canada's largest banks. Which bank is set to deliver better…

Read more »

The Motley Fool
Bank Stocks

The Case to Buy Bank of Montreal Today

| Joseph Solitro

Here are three reasons why Bank of Montreal’s (TSX:BMO)(NYSE:BMO) stock could outperform the overall market going forward.

Read more »

Dividend Stocks

What Would it Take for Toronto-Dominion Bank to Cut its Dividend?

| Benjamin Sinclair

Even in the most pessimistic scenarios, Toronto-Dominion Bank (TSX:TD)(NYSE:TD) will not cut its payout.

Read more »

The Motley Fool
Bank Stocks

Should Investors Buy Royal Bank of Canada or Bank of Montreal?

| Andrew Walker

Royal Bank of Canada (TSX:RY)(NYSE:RY) and Bank of Montreal (TSX:BMO)(NYSE:BMO) are both trading at attractive prices right now. Does one…

Read more »

The Motley Fool
Dividend Stocks

Buy Bank of Nova Scotia Now or You’ll Regret it Later

| Joseph Solitro

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) could be one of the market’s top performing stocks going forward for three primary reasons.…

Read more »

The Motley Fool
Dividend Stocks

Does Toronto-Dominion Bank or Canadian Imperial Bank of Commerce Have the Better Dividend?

| Benjamin Sinclair

Both Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) are great dividend stocks. But which is better?

Read more »

The Motley Fool
Bank Stocks

4 Reasons to Put Canadian Imperial Bank of Commerce on Your Radar

| Andrew Walker

Here's why Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) deserves more respect.

Read more »

The Motley Fool
Bank Stocks

Why Is Royal Bank of Canada 20% Cheaper Than it Was 12 Months Ago?

| Benjamin Sinclair

Royal Bank of Canada (TSX:RY)(NYSE:RY) has seen its share price fall even as its earnings increase.

Read more »

The Motley Fool
Bank Stocks

3 Reasons Why Bank of Nova Scotia Shares Have Declined by 18% in the Last 2 Years

| Benjamin Sinclair

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) shares have declined badly in the last 24 months. Is the stock now a bargain?

Read more »

The Motley Fool
Bank Stocks

Toronto-Dominion Bank Reclaims its Title as Canada’s Largest Bank: Is Now the Time to Buy?

| Joseph Solitro

Toronto-Dominion Bank’s (TSX:TD)(NYSE:TD) stock has risen slightly since it announced third-quarter earnings on August 27. Should you be a buyer?

Read more »

The Motley Fool
Bank Stocks

Is it Safe to Buy Bank of Nova Scotia?

| Andrew Walker

Here's what investors need to know about Bank of Nova Scotia (TSX:BNS)(NYSE:BNS).

Read more »

The Motley Fool
Dividend Stocks

3 Reasons to Put Bank of Montreal in Your Dividend Portfolio

| Andrew Walker

Here's why Bank of Montreal (TSX:BMO)(NYSE:BMO) deserves to be on your radar.

Read more »

The Motley Fool
Bank Stocks

3 Reasons Why National Bank of Canada Is a Strong Buy

| Joseph Solitro

National Bank of Canada (TSX:NA) is a strong buy and should be added to your portfolio for three primary reasons.

Read more »

Bank Stocks

What Does the Recession Mean for Toronto-Dominion Bank Investors?

| Adam Mancini

As one of Canada's largest banks, Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is deeply linked to the Canadian economy. With Canada now in…

Read more »

Bank Stocks

Attention Millennials: Here’s Your Instant 3-Stock Retirement Portfolio

| Andrew Walker

Here's how Bank of Montreal (TSX:BMO)(NYSE:BMO), Telus Corporation (TSX:T)(NYSE:TU), and one more top stock can help young investors reach their…

Read more »

The Motley Fool
Bank Stocks

Is Canadian Western Bank a Top Value Play Today?

| Joseph Solitro

Canadian Western Bank (TSX:CWB) released third-quarter earnings on September 3, and its stock has reacted by falling over 6%. Is…

Read more »

The Motley Fool
Dividend Stocks

Which of Canada’s Big 5 Banks Has the Best Dividend?

| Benjamin Sinclair

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) have the highest yields, but Toronto-Dominion Bank (TSX:TD)(NYSE:TD)…

Read more »

The Motley Fool
Bank Stocks

Why Is Toronto-Dominion Bank Nearly 15% Cheaper Than it Was 1 Year Ago?

| Benjamin Sinclair

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) shares have declined while its earnings have increased. What's going on?

Read more »

The Motley Fool
Bank Stocks

Laurentian Bank of Canada Beats Q3 Expectations: Is Now the Time to Buy?

| Joseph Solitro

Laurentian Bank of Canada (TSX:LB) released third-quarter earnings results on September 2, and its stock reacted by falling over 1%.…

Read more »

The Motley Fool
Bank Stocks

5 Reasons Investors Should Buy Royal Bank of Canada

| Andrew Walker

Here's why Royal Bank of Canada (TSX:RY)(NYSE:RY) deserves to be in your portfolio.

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.