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

Is Bank of Nova Scotia a Good Buy for its 4.3% Yield?

| Kay Ng

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is a safe, long-term investment that would double your income every 12 years or so.

Read more »

The Motley Fool
Bank Stocks

Which Is a Better Investment: Canadian National Railway Company vs. Toronto-Dominion Bank

| Andrew Walker

Canadian National Railway Company (TSX:CNR)(NYSE:CNI) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) are solid long-term investments, but one has an edge right now.

Read more »

The Motley Fool
Dividend Stocks

Should Investors Forget the Big 5 and Invest in National Bank of Canada Instead?

| Nelson Smith

National Bank of Canada (TSX:NA) is consistently one of Canada's cheapest financials. Is the market missing something, or is there…

Read more »

The Motley Fool
Dividend Stocks

4 Simple Steps to Build a High-Quality Dividend Portfolio

| Kay Ng

Build a solid income portfolio today by buying companies that offer essential products and services like Fortis Inc. (TSX:FTS), Empire…

Read more »

The Motley Fool
Dividend Stocks

What Is the Better Investment: Manulife Financial Corporation or Sun Life Financial Inc.?

| Demetris Afxentiou

Manulife Financial Corporation (TSX:MFC)(NYSE:MFC) and Sun Life Financial Inc. (TSX:SLF)(NYSE:SLF) are two large financial companies, but which one is the…

Read more »

The Motley Fool
Bank Stocks

Canadian Imperial Bank of Commerce: Is it Still a Safe Investment?

| Andrew Walker

Here's what investors need to know before buying Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM).

Read more »

The Motley Fool
Dividend Stocks

Royal Bank of Canada and Toronto-Dominion Bank: How Safe Are Their Dividends?

| Benjamin Sinclair

Is there any danger of a dividend cut at Royal Bank of Canada (TSX:RY)(NYSE:RY) or Toronto-Dominion Bank (TSX:TD)(NYSE:TD)?

Read more »

The Motley Fool
Dividend Stocks

Could the Post-Earnings Rally in Home Capital Group Inc.’s Shares Continue?

| Joseph Solitro

Home Capital Group Inc. (TSX:HCG) released second-quarter earnings on July 29, and its stock has reacted by rising over 10%.…

Read more »

The Motley Fool
Dividend Stocks

What Kind of Stocks Should You Hold in a TFSA?

| Kay Ng

After gaining investing experience, investors should invest tax-free in a TFSA by holding stocks such as Canadian National Railway Company…

Read more »

The Motley Fool
Bank Stocks

3 Reasons Bank Investors Don’t Need to Worry About a Housing Crash

| Adam Mancini

U.S. investors are short-selling Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Royal Bank of Canada (TSX:RY)(NYSE:RY) to profit from a housing crash. Here's…

Read more »

The Motley Fool
Dividend Stocks

Should Dividend Investors Pick Bank of Nova Scotia or Canadian Imperial Bank of Commerce?

| Andrew Walker

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

Read more »

The Motley Fool
Dividend Stocks

Toronto-Dominion Bank: a Quality Dividend Stock With a 4% Yield

| Kay Ng

Toronto-Dominion Bank's (TSX:TD)(NYSE:TD) valuation is priced at a discount, just like it was in 2012 after it came out of…

Read more »

The Motley Fool
Dividend Stocks

3 Top Picks to Start a Balanced Dividend Portfolio

| Andrew Walker

Here's why Fortis Inc. (TSX:FTS), Telus Corporation (TSX:T)(NYSE:TU), and one other Canadian icon deserve a closer look.

Read more »

The Motley Fool
Dividend Stocks

Dividend Investors: Should You Buy Toronto-Dominion Bank or Bank of Nova Scotia?

| Andrew Walker

Here's what investors need to know when evaluating Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS).

Read more »

The Motley Fool
Bank Stocks

Why Is Toronto-Dominion Bank Canada’s Most Shorted Stock?

| Adam Mancini

Investors are widely betting that Toronto-Dominion Bank (TSX:TD)(NYSE:TD) shares are headed downwards. Should you be worried?

Read more »

The Motley Fool
Dividend Stocks

Attention Retirees: 2 Safe Dividend Stocks Yielding More Than 4.5%

| Andrew Walker

Here's why retirees can rely on Bank of Montreal (TSX:BMO)(NYSE:BMO) and BCE Inc. (TSX:BCE)(NYSE:BCE).

Read more »

The Motley Fool
Bank Stocks

Bank of Nova Scotia Lowers Risk by Expanding Internationally

| Ryan Vanzo

When looking at Canada’s big banks, Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) has a unique international advantage.

Read more »

The Motley Fool
Dividend Stocks

3 Reasons Canadian Western Bank Is a Great Long-Term Investment

| Kay Ng

Canadian Western Bank's (TSX:CWB) now gives a decent 3.7% yield at a record low valuation. It's a rare opportunity to…

Read more »

The Motley Fool
Bank Stocks

Toronto-Dominion Bank and Royal Bank of Canada: Which Should You Buy?

| Adam Mancini

Both Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Royal Bank of Canada (TSX:TD)(NYSE:TD) are trading at bargain prices.

Read more »

The Motley Fool
Bank Stocks

3 Reasons Bank of Montreal Is Canada’s Most Underrated Bank

| Adam Mancini

Here's why investors need to start considering Bank of Montreal (TSX:BMO)(NYSE:BMO) for above-average returns with less risk.

Read more »

Dividend Stocks

2 Top Dividend Stocks for Young Investors

| Andrew Walker

Here's why Royal Bank of Canada (TSX:RY) (NYSE:RY) and Fortis Inc. (TSX:FTS) are great choices for new investors.

Read more »

The Motley Fool
Bank Stocks

Why Bank of Montreal Is a Buy After the Interest Rate Cut

| Adam Mancini

The Bank of Canada has cut overnight rates to a low 0.50%. While this may be bad for bank profits,…

Read more »

The Motley Fool
Dividend Stocks

2 Dividend Growth Stars for All Investors

| Andrew Walker

Here's why Telus Corporation (TSX:T)(NYSE:TU) and Bank of Montreal (TSX:BMO)(NYSE:BMO) are smart picks right now.

Read more »

The Motley Fool
Dividend Stocks

How to Reduce Risks of Investing in Stocks: Part 3

| Kay Ng

You can apply one simple strategy to get positive returns even in a down market. Buy stable, quality dividend companies…

Read more »

The Motley Fool
Bank Stocks

5 Unbelievable Facts About the Vancouver Real Estate Market

| Nelson Smith

The Vancouver real estate market is incredibly overvalued. Why investors want to avoid it, Canadian Western Bank (TSX:CWB), and Genworth…

Read more »

Dividend Stocks

4 Oversold Dividend-Growth Giants

| Andrew Walker

BCE Inc. (TSX:BCE)(NYSE:BCE) and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) are just two of the stocks that dividend investors should be…

Read more »

The Motley Fool
Bank Stocks

These American Banks Are Better Buys Than Royal Bank of Canada and Toronto-Dominion Bank

| Benjamin Sinclair

You should trade your Royal Bank of Canada (TSX:RY)(NYSE:RY) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) shares for JPMorgan Chase & Co (NYSE:JPM)…

Read more »

Dividend Stocks

2 Top Dividend-Growth Stocks for Long-Term Investors

| Andrew Walker

Here's why BCE Inc. (TSX:BCE)(NYSE:BCE) and Bank of Montreal (TSX:BMO)(NYSE:BMO) are smart picks in the current environment.

Read more »

The Motley Fool
Dividend Stocks

Is Now the Time to Buy Canadian Imperial Bank of Commerce?

| Nelson Smith

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is the cheapest bank in Canada. But there's a big reason why it trades…

Read more »

Bank Stocks

Is Toronto-Dominion Bank Prepared for a Recession?

| Adam Mancini

Canada is technically in a recession, and while it may not last, a slow economy is a headwind for banks.…

Read more »

The Motley Fool
Bank Stocks

5 Unbelievable Facts About the Toronto Real Estate Market

| Nelson Smith

Bullish on Toronto real estate, Home Capital Group Inc. (TSX:HCG), or Genworth MI Canada Inc. (TSX:MIC)? Then you've got to…

Read more »

The Motley Fool
Bank Stocks

This Is a Golden Opportunity to Buy Canadian Banks

| Benjamin Sinclair

You should snap up Canadian banks like Royal Bank of Canada (TSX:RY)(NYSE:RY) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) while they're still unpopular.

Read more »

The Motley Fool
Dividend Stocks

Canadian Western Bank Shares Have Fallen. Is This an Opportunity or a Value Trap?

| Kay Ng

Canadian Western Bank (TSX:CWB) shares have fallen more than 38%. Is this a compelling opportunity or a value trap?

Read more »

The Motley Fool
Bank Stocks

Bank of Canada Rate Cut Could Pressure Canadian Banks

| Doug Watt

The Bank of Canada's decision to cut interest rates by 25 basis points could have a short-term impact on Canadian…

Read more »

The Motley Fool
Dividend Stocks

Value Investors: 3 Stocks That Could Widely Outperform Their Industries

| Joseph Solitro

Are you looking to add a new stock to your portfolio? If so, Bank of Montreal (TSX:BMO)(NYSE:BMO), CCL Industries Inc.…

Read more »

The Motley Fool
Dividend Stocks

Should Dividend Investors Hold 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) both offer an attractive yield. but one is a…

Read more »

The Motley Fool
Dividend Stocks

These 3 Stocks Are Screaming Buys

| Joseph Solitro

Looking to add a new position? If so, Progressive Waste Solutions Ltd. (TSX:BIN)(NYSE:BIN), Macdonald Dettwiler & Associates Ltd. (TSX:MDA), and…

Read more »

The Motley Fool
Dividend Stocks

3 High-Yielding Financial Stocks to Buy Today

| Joseph Solitro

Looking to add yield to your portfolio with a financial stock? If so, GMP Capital Inc. (TSX:GMP), Toronto-Dominion Bank (TSX:TD)(NYSE:TD),…

Read more »

The Motley Fool
Bank Stocks

Why Did Home Capital Group Inc. Drop 15%?

| Nelson Smith

Home Capital Group Inc. (TSX:HCG) is a former market darling. Is the 15% decline the beginning of even more bad…

Read more »

Bank Stocks

Should You Buy Toronto-Dominion Bank or Royal Bank of Canada Right Now?

| Andrew Walker

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Royal Bank of Canada (TSX:RY)(NYSE:RY) are both top picks, but one is a safer bet right…

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.