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

Retirement Planning: 3 Diversified Stocks for a Healthy Portfolio

| Adam Othman

With the right diversification strategy and ample time for growth, you can grow your retirement portfolio to amazing proportions.

Read more »

Tech Stocks

Canadian Stocks Under $100: My Top 3 Picks This Month

| Nicholas Dobroruka

There’s no need to break the bank to invest in the Canadian stock market. These three top picks are all…

Read more »

Bank Stocks

The Top-Performing Bank Stock in 2021 Is Not 1 of the Big 5

| Christopher Liew, CFA

Canadian bank stocks are solid investment choices, although the sixth-largest bank, not one of the Big Five, is the best…

Read more »

Dividend Stocks

3 of the Best Canadian Dividend Stocks to Buy Right Now

| Nicholas Dobroruka

Looking to earn passive income? Here’s a list of three Canadian dividend stocks that should be at the top of…

Read more »

Bank Stocks

TD Stock Price: Will TD Have a Strong Q4?

| Aditya Raghunath

Canadian blue-chip stock Toronto-Dominion Bank is well poised to survive an uncertain macro-environment in Q4 and beyond.

Read more »

Dividend Stocks

3 Stocks I’ve Recently Added to My Portfolio

| Jed Lloren

Are you looking for new stocks to add to your portfolio? Here are three recent additions to my investment portfolio!

Read more »

Energy Stocks

4 Cheap Canadian Stocks to Buy in October 2021

| Nicholas Dobroruka

Here’s a list of four top Canadian stocks that are trading at discounts right now. All four should be on…

Read more »

Dividend Stocks

2 Canadian Stocks I’m Never Selling

| Andrew Button

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is one Canadian stock I'm never selling.

Read more »

Energy Stocks

3 Under-$100 Canadian Stocks I’d Buy to Retire Early

| Nicholas Dobroruka

With just $100, you can own any of these three top Canadian stocks. I have all three on my watch…

Read more »

Bank Stocks

3 Canadian Stocks That Are Value Traps

| Andrew Button

Baytex Energy (TSX:BTE)(NYSE:BTE) stock is a classic value trap.

Read more »

analyze data
Dividend Stocks

3 Dividend Stocks That Investors Should Hold for the Next Decade

| Jed Lloren

Here are three dividend stocks to consider adding to your portfolio!

Read more »

calculate and analyze stock
Bank Stocks

Is National Bank of Canada the Best Bank to Own for the Rest of 2021?

| Robin Brown

National Bank (TSX:NA) isn't the largest Canadian bank, but it is the top-performing bank stock! So, is it a good…

Read more »

Bank Stocks

Are Bank Stocks the Best Investment in Canada Right Now?

| Ambrose O'Callaghan

Canadian bank stocks like Royal Bank of Canada (TSX:RY)(NYSE:RY) have thrived in 2021, but the economy is starting to slow.

Read more »

Bank Stocks

Canadian Banks: 2 Giants to Buy

| Jared Seguin

These two blue-chip Canadian banks are worth checking out for long-term investors hoping to make great returns over time.

Read more »

Dividend Stocks

Retirees: Can You Live Solely on Your OAS and CPP Pension?

| Christopher Liew, CFA

Canadians might need more endless income streams besides their OAS and CPP to live comfortably in retirement.

Read more »

Dividend Stocks

The 3 Smartest Dividend Stocks to Buy With $800

| Christopher Liew, CFA

Your $800 can produce recurring income streams if you buy three reliable dividend stocks.

Read more »

Bank Stocks

1 of the Best Stocks With Dividends to Buy in Canada

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) is a Canadian stock with a strong dividend that value investors should not ignore as market waters…

Read more »

Tech Stocks

2 TSX Stocks That Likely Won’t Let Investors Down

| Sneha Nahata

These stocks have strong potential for growth and will likely deliver higher returns in the coming years.

Read more »

Caution, careful
Dividend Stocks

3 Stocks to Buy if You Think Trouble Is Looming

| Christopher Liew, CFA

Trouble looms in Q4 2021, given the TSX’s erratic behaviour in recent weeks.

Read more »

Dividend Stocks

3 Deep-Value Stocks on Sale Today

| Andrew Button

Now is a good time to research deep-value stocks like Suncor Energy Inc (TSX:SU)(NYSE:SU).

Read more »

Dividend Stocks

3 Top Canadian Dividend Stocks to Buy in October 2021

| Vineet Kulkarni

While dividend stocks are relatively slow moving, it bodes well when uncertainties in the broader markets increase. Here are some…

Read more »

Dividend Stocks

3 Under-$100 Canadian Dividend Stocks I’d Buy Now

| Sneha Nahata

These three high-quality dividend stocks could help investors generate reliable and growing dividend income. 

Read more »

money cash dividends
Bank Stocks

2 Top TSX Dividend Stocks to Buy on a Pullback in October

| Andrew Walker

Investors can take advantage of a market correction to buy these top TSX dividend stocks.

Read more »

Tech Stocks

Down Over 10%: Should You Buy These 4 High-Growth Stocks?

| Rajiv Nanjapla

The steep correction in these four high-growth stocks provides an excellent entry point for long-term investors.

Read more »

Dividend Stocks

3 Top Stocks for a Rich Retirement

| Andrew Button

If you're looking to retire wealthy, it wouldn't hurt to own bank stocks like Toronto-Dominion Bank (TSX:TD)(NYSE:TD).

Read more »

Dividend Stocks

Bank of Canada: Let Inflation Run Hot for the Rest of 2021

| Christopher Liew, CFA

The Bank of Canada will likely allow inflation to run hot until the end of 2021. However, if you fear…

Read more »

Dividend Stocks

Interest Outlook: Rate Hike Coming in Q4 2022

| Christopher Liew, CFA

The forecasts for the interest rate hike are varied, but the consensus is Q4 2022. Investors looking for buying opportunities…

Read more »

Dividend Stocks

Top 3 Growth and Income Stocks to Buy Now

| Sneha Nahata

With ample liquidity and lower interest rates, the stock market is an exciting place to be at the moment.

Read more »

Coronavirus

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

| Sneha Nahata

These TSX stocks will likely gain from improved economic environment and strength in base business.

Read more »

Dividend Stocks

2 Top Canadian Bank Stocks to Consider Right Now

| Chris MacDonald

Here's why long-term investors may want to consider these top two Canadian bank stocks in this current investing environment today.

Read more »

Dividend Stocks

2 Top Stocks to Buy in a Falling Market

| Christopher Liew, CFA

A falling market isn’t as worrisome if your core holdings are resilient and dependable income stocks. Buy the Canadian Imperial…

Read more »

Dividend Stocks

Top 3 Passive Income Stocks to Buy in October

| Nicholas Dobroruka

The market’s valuation has me searching for more value-oriented buys this month. These passive income stocks are on my radar.

Read more »

Bank Stocks

Got $1,000? This Unstoppable TSX Stock Could Make You Richer

| Sneha Nahata

This TSX stock has the potential to outperform the TSX60 Index by a wide margin and make its investors richer.

Read more »

Dividend Stocks

3 Incredible Bargains to Buy in October 2021

| Chris MacDonald

Looking for incredible bargains in today's overvalued market? These three top Canadian stocks are among the best for such investors…

Read more »

Dividend Stocks

3 Dividend Stocks You Should Keep for Decades

| Christopher Liew, CFA

Not all dividend-paying companies can sustain payouts for decades. However, the Bank of Montreal stock, BCE stock, and Canadian Utilities…

Read more »

Dividend Stocks

Dividend Stocks: 2 TSX Banking Superstars

| Jared Seguin

Looking to pick up shares of some top Canadian dividend stocks? These two banking giants could be great options to…

Read more »

Bank Stocks

Why Shares of National Bank of Canada Fell Over 2.5% in September

| Aditya Raghunath

National Bank of Canada stock is up over 35% in 2021, despite its negative returns in September.

Read more »

Bank Stocks

Why Royal Bank of Canada Fell 3% in September

| Aditya Raghunath

Shares of the Royal Bank of Canada have fallen close to 3% in the last month. But its financials remain…

Read more »

Bank Stocks

2 Bank Stocks to Own for the Rest of Your Life

| Christopher Liew, CFA

There are assets you can own for life to earn everlasting income. Canada’s banking sector is a solid investment ground,…

Read more »

Dividend Stocks

3 Reasons to Buy Scotiabank (TSX:BNS) Stock Right Now

| Adam Othman

Scotiabank stock could be an ideal stock to add to your investment portfolio, especially if you are just starting investing…

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.