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

Bank Stocks

3 Top Bank Stocks to Buy in November

| Ambrose O'Callaghan

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and other top bank stocks are still worth targeting as we move into November.

Read more »

Bank Stocks

1 TSX Stock That Could Be the Opportunity of a Lifetime

| Christopher Liew, CFA

One TSX stock with an extended competitive advantage and outstanding dividend history could be an investor’s opportunity of a lifetime.

Read more »

Bank Stocks

Bank Stocks: 25% Dividend Hike in 2022?

| Christopher Liew, CFA

Big banks could raise their dividends by as much as 25% when the OSFI lifts its restrictions on payout increases.

Read more »

Energy Stocks

2 Top Canadian Stocks I’d Buy Before the End of the Year

| Nicholas Dobroruka

The market is up an incredible 20% year to date. Here are two Canadian stocks I’d recommend buying before the…

Read more »

Dividend Stocks

Trick or Treat? 2 TSX Stocks Could Be Dividend Traps

| Christopher Liew, CFA

Investors wonder whether two prominent TSX stocks that cut dividends at the height of the pandemic are dividend traps in…

Read more »

Dividend Stocks

2 Massive TFSA Mistakes to Avoid When Buying Stocks

| Christopher Liew, CFA

TFSA investors should be mindful of the tax consequences when buying foreign stocks and conducting a business in their accounts.

Read more »

Bank Stocks

3 Canadian Stocks to Invest $3,000 in Right Now

| Sneha Nahata

Steady economic growth, recovery in corporate earnings, and higher demand will likely drive these Canadian stocks higher.

Read more »

Stocks for Beginners

Getting Started in the Stock Market? Here Are 3 Investments You Shouldn’t Miss

| Jed Lloren

Here are three investments you shouldn’t miss as a new investor.

Read more »

Dividend Stocks

3 Best Stock Investments in Canada Today

| Christopher Liew, CFA

Investors’ confidence in the stock market keeps rising as the record run continues. TSX’s win streak is now 13 consecutive…

Read more »

Energy Stocks

Got $1,000? Buy These 3 Top Mid-Cap Stocks

| Rajiv Nanjapla

Given the solid market conditions and their growth initiatives, these three mid-cap stocks can deliver superior returns over the next…

Read more »

Caution, careful
Bank Stocks

Why Big Banks Are Set Up for a Massive Crash

| Amy Legate-Wolfe

The Big Six banks have done well in the past. But if they don't make an incredibly large change, each…

Read more »

Dividend Stocks

Got $1,000? The 3 Best TSX Stocks to Buy Today

| Vineet Kulkarni

Here are three top Canadian names that might soar higher.

Read more »

Dividend Stocks

4 Top Dividend Stocks for Stable Passive Income

| Rajiv Nanjapla

Given their predictable cash flows and healthy outlook, these four dividend stocks are an excellent addition to your portfolios.

Read more »

Bank Stocks

The Best Bank Stock for 2022

| Vishesh Raisinghani

The Canadian banking sector has always been fertile ground for steady returns. Banks here are well-diversified, exposed to a real…

Read more »

Bank Stocks

Bank Stocks: 2 TSX Gems to Buy

| Jared Seguin

Looking to pick up shares of some high quality bank stocks? These two TSX superstars are amongst the best choices…

Read more »

Dividend Stocks

Retirees: Build a Strong 2nd Pension With These 2 Dividend Stocks

| Christopher Liew, CFA

Would-be retirees can fatten their nest eggs and build a strong second pension by investing in two top-notch retirement stocks.

Read more »

Dividend Stocks

4 Stocks Is All You’ll Need to Retire Wealthy

| Christopher Liew, CFA

Canadians saving for the future need only four dividend stocks to build a nest egg and have ample wealth in…

Read more »

Tech Stocks

3 High-Growth Canadian Stocks to Buy Ahead of Earnings

| Rajiv Nanjapla

Given their healthy growth prospects, I expect these three high-growth Canadian stocks to post strong earnings next month.

Read more »

Dividend Stocks

2 Top TSX Value Stocks to Buy Today

| Adam Othman

Adding undervalued stocks to your portfolio is quite easy. Adding undervalued stocks that bring great value and potential to the…

Read more »

Dividend Stocks

3 Financial Stocks to Consider As the Sector Slows Down

| Adam Othman

Thanks to the recent rally, many financial stocks became too hot to touch, but now that the sector has slowed…

Read more »

Bank Stocks

This Bank Is Near its 52-Week High and Is Still a Solid Buy!

| Demetris Afxentiou

Bank stocks are notoriously great long-term investments. This big bank stock is near its 52-week high and still a solid…

Read more »

Tech Stocks

The 5 Best Canadian Stocks I’d Buy With $500 Right Now

| Sneha Nahata

These five Canadian stocks are must-haves in your portfolio to outpace the benchmark index and create a considerable amount of…

Read more »

Bank Stocks

Top 3 Bank Stocks to Buy in October 2021

| Ambrose O'Callaghan

Canadians should start evaluating top bank stocks like Bank of Montreal (TSX:BMO)(NYSE:BMO) ahead of the final bank earnings release.

Read more »

Dividend Stocks

Want to Retire Faster? These 2 Stocks Could Get You There

| Christopher Liew, CFA

Canadians can retire faster by investing in two ever-reliable dividend stocks.

Read more »

Dividend Stocks

3 Solid Companies to Buy Amid Stock Market Turmoil

| Adam Othman

The stock market has regained momentum after a slight slump, but it might just be an indication of coming fluctuations,…

Read more »

Tech Stocks

Got $3,000? The 3 Best TSX Stocks to Buy Now

| Sneha Nahata

These three TSX-listed stocks could continue outperforming other asset classes in the foreseeable future.

Read more »

Dividend Stocks

Passive Income: Earn 5.79% Per Year the Easy Way

| Christopher Liew, CFA

Creating passive income and earning 5.79% annually is possible if you invest in a Big Bank stock and a real…

Read more »

Bank Stocks

Top 3 Canadian Bank Stocks (and Dividends) to Buy Now

| Jitendra Parashar

These three top Canadian bank stocks are underperforming the TSX lately. But I expect them to post a sharp recovery…

Read more »

Dividend Stocks

3 Canadian Dividend Stocks to Watch This Month

| Nicholas Dobroruka

I’ve got these dividend stocks on my radar this month. Find out why I’m bullish on each of the three…

Read more »

Dividend Stocks

The 3 Best Canadian Dividend Stocks to Buy With $1,000 Now

| Christopher Liew, CFA

The environment is conducive to investing. You can use your $1,000 to buy the top-performing dividend stocks in the energy,…

Read more »

Dividend Stocks

2 Top Canadian Bank Stocks to Buy Before They Hike Their Dividends

| Chris MacDonald

Here are two top Canadian bank stocks I think are well positioned to provide investors with excellent long-term total returns…

Read more »

Dividend Stocks

3 Top Canadian Stocks to Buy in Q4 2021

| Christopher Liew, CFA

Investors can buy three top TSX stocks in Q4 2021 to form a diversified portfolio that can deliver income and…

Read more »

Dividend Stocks

2 Canadian Dividend Stocks to Watch in October 2021

| Nicholas Dobroruka

Don’t miss out on these two discounted dividend stocks. These low prices won’t last long, so I’d have both companies…

Read more »

Dividend Stocks

50/50: Chances the TSX Will Pull Back in Q4 2021

| Christopher Liew, CFA

The TSX is nearing its record high in September, although the chances of a market pullback in Q4 2021 could…

Read more »

Dividend Stocks

47% of Canadians Made This Huge TFSA Mistake

| Christopher Liew, CFA

Canadians can correct their huge TFSA mistake by holding a greater proportion of income-producing assets in the account rather than…

Read more »

Dividend Stocks

1 Overhyped Strategy Isn’t the Way to Retirement Happiness

| Christopher Liew, CFA

The FIRE movement and its “retire early” concept is a daunting task and not the only way to retirement happiness.

Read more »

Stocks for Beginners

3 Stocks for a New Portfolio

| Jed Lloren

Here are three stocks that investors should consider holding in a new portfolio.

Read more »

Dividend Stocks

3 Retirement Stocks to Fatten Up Your Nest Egg

| Christopher Liew, CFA

Canadians who want to fatten their nest eggs for the sunset years should start investing in three retirement stocks as…

Read more »

Dividend Stocks

Retirees: 3 Costly Mistakes That Lead to Financial Dislocation

| Christopher Liew, CFA

Financial dislocation in the sunset years won’t happen if soon-to-be retirees can avoid three costly mistakes.

Read more »

Tech Stocks

3 TSX Stocks With Solid Upside Potential

| Sneha Nahata

I expect the momentum in these three Canadian stocks to sustain in the future.

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.