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

TFSA Investors: 1 Top Buy-and-Hold Forever Stock Pick

| Adam Othman

TFSA investors should consider snatching up Toronto-Dominion Bank shares to realize massive long-term and tax-free returns.

Read more »

Dividend Stocks

1 Catalyst That Could Send TD Stock Soaring This Year

| Chris MacDonald

Here's why I think Toronto-Dominion Bank (TSX:TD)(NYSE:TD) remains the best growth pick among Canadian banks today.

Read more »

calculate and analyze stock
Dividend Stocks

Forget TD Stock: 2 Canadian Growth Stocks to Buy Instead

| Daniel Da Costa

TD is one of the top bank stocks in Canada. However, these Canadian growth stocks offer much better potential over…

Read more »

Tech Stocks

2 Top Canadian Stocks I Would Buy With $2,000 for 2021

| Sneha Nahata

I expect the large addressable market, product expansion, and strong demand to support the uptrend in these two stocks.

Read more »

Dividend Stocks

2 Top Canadian Dividend Kings That Could Make You Rich

| Joey Frenette

Royal Bank of Canada (TSX:RY)(NYSE:RY) and CN Rail (TSX:CNR)(NYSE:CNI) are great Dividend Kings to buy now and hold forever.

Read more »

Bank Stocks

Move Aside Big Five Canadian Bank Stocks!

| Kay Ng

Next time the big Canadian bank stocks correct, highly consider buying this dividend stock instead for the potential to outperform…

Read more »

Stocks for Beginners

Today’s Top TSX Pick: TD Bank Stock

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) is my top TSX pick of the day because I believe the next decade will be full…

Read more »

Bank Stocks

Not Clickbait: Retire a Multi-Millionaire

| Amy Legate-Wolfe

If you want to retire a multi-millionaire, you need two things: a TFSA, and $250 a month, and the best…

Read more »

Dividend Stocks

3 Top Dividend Stocks That Have More Than Doubled Their Payouts in 7 Years

| Rajiv Nanjapla

Given their stable cash flows and high-growth prospects, these Canadian stocks can continue to raise their dividends.

Read more »

Dividend Stocks

3 of the Best Canadian Dividend Stocks to Buy Now

| Stephanie Bedard-Chateauneuf, MBA

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), TC Energy (TSX:TRP)(NYSE:TRP), and Fortis (TSX:FTS)(NYSE:FTS) are three of the best Canadian dividend stocks to…

Read more »

Bank Stocks

TSX Today: Should You Buy Canadian Bank Stocks Now?

| Kay Ng

On the fence about buying (more) Canadian bank shares at current levels? Reading this can help!

Read more »

Dividend Stocks

3 Top Canadian Stocks to Buy in Spring 2021

| Chris MacDonald

Here are three of my top picks that I'd invite long-term investors to take a close look at right now.

Read more »

Tech Stocks

TSX Stars: 2 Behemoths to Buy Today

| Chris MacDonald

Here's why Royal Bank of Canada (TSX:RY)(NYSE:RY) and Shopify Inc. (TSX:SHOP)(NYSE:SHOP) aren't only big, but great long-term picks.

Read more »

Dividend Stocks

3 High-Yield Dividend Stocks To Grab in April

| Andrew Button

If you're looking for high yield in April, consider Canadian Utilities (TSX:SU) stock.

Read more »

Stocks for Beginners

1 Sneaky Trick to Turn Taxes Into Your Retirement Fund

| Amy Legate-Wolfe

There is one sneaky trick you can do to create a retirement fund, even if you're young! Just take a…

Read more »

Dividend Stocks

3 Top Stocks to Buy and Hold for Decades

| Christopher Liew, CFA

The buy-and-hold approach is a proven strategy to help investors build wealth over time. On the TSX, Canadian Imperial Bank…

Read more »

Dividend Stocks

TFSA Investors: 3 of the Best Canadian Stocks to Buy for 2021 and Beyond

| Sneha Nahata

Investment in these three Canadian stocks through your TFSA will let you earn solid tax-free capital gains and dividend income. 

Read more »

Tech Stocks

3 Top TSX Growth Stocks to Buy Today

| Jed Lloren

Which three TSX growth stocks should investors add to their portfolio today? If you're hoping to bolster your returns, look…

Read more »

Bank Stocks

1 Top TSX Bank Stock I’d Buy Today

| Chris MacDonald

Here's why Royal Bank of Canada (TSX:RY)(NYSE:RY) continues to be on the top of my list for long-term investors looking…

Read more »

Bank Stocks

TSX King: TD Stock Is a Top Dividend Stud to Bank On

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) stock and the high-dividend-yielding Canadian banking giants are TSX kings that should be bought before rates rise.

Read more »

Energy Stocks

These 3 Canadian Stocks Are Up Over 20%: Will the Momentum Continue?

| Rajiv Nanjapla

Given the favorable environment and their growth prospects, these three Canadian stocks can continue their uptrend.

Read more »

Dividend Stocks

2 Incredible Dividend Stocks To Buy and Hold Forever

| Christopher Liew, CFA

Practitioners of the buy-and-hold strategy do not worry about market fluctuations. You only need established income providers like the Royal…

Read more »

Bank Stocks

3 Top Dividend-Paying Bank Stocks To Buy Now for 2021

| Sneha Nahata

These banking giants are expected to deliver outsized returns on the back of economic recovery.

Read more »

Energy Stocks

The 3 Best Canadian Stocks Under $100 I’d Buy Right Now

| Nicholas Dobroruka

Now is the time to be loading up on Canadian stocks. The market has plenty of momentum as the economy…

Read more »

Dividend Stocks

This Top Bank Stock Is a Must-Buy!

| Demetris Afxentiou

Looking for a top bank stock to add to your portfolio? This big bank has lucrative long-term growth potential and…

Read more »

Dividend Stocks

3 of the Best Large-Cap Stocks to Buy Now

| Sneha Nahata

These large-cap stocks are likely to add stability to your portfolio and could continue to outperform the broader markets with…

Read more »

Bank Stocks

5 Best Canadian Stocks I’d Buy With $10,000

| Sneha Nahata

As top TSX stocks reverse some of their gains, I believe it’s time to invest some of the fundamentally strong stocks for…

Read more »

Dividend Stocks

TD Bank (TSX:TD) Expects a $223 Million Payday From Schwab

| Andrew Button

The Toronto-Dominion Bank (TSX:TD)(NYSE:TD) expects $223 in earnings from Charles Schwab (NYSE:SCHW) in the second quarter.

Read more »

Tech Stocks

2 Canadian Stocks Under $100 to Buy Right Now

| Nicholas Dobroruka

The stock market is on fire, but you don’t need to pay top prices to invest. Add these two companies…

Read more »

Dividend Stocks

2 Top Undervalued TSX Stocks to Pounce On by May 2021

| Joey Frenette

Canadians should buy Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR) and another undervalued TSX stock in May 2021 to get rich over the…

Read more »

Dividend Stocks

Today’s Top Buy: Scotiabank

| Chris MacDonald

Here's why Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) should be on every investor's watch list right now.

Read more »

Dividend Stocks

3 Top Canadian Stocks to Buy Today

| Chris MacDonald

Here are three of my top Canadian picks I'd recommend investors check out right now.

Read more »

Dividend Stocks

The Best Canadian Dividend Stocks: 3 to Watch

| Jared Seguin

Want to find out what the best Canadian dividend stocks are? These three names are definitely near the top of…

Read more »

Dividend Stocks

3 Top Canadian Stocks to Buy Today

| Chris MacDonald

Here are three top picks for investors looking to take advantage of an economic recovery coming out of this pandemic.

Read more »

Dividend Stocks

1 Catalyst That Could Take This Top TSX Bank on a Nice Ride in 2021

| Chris MacDonald

Here's why Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) should be a top pick for investors that are bullish on Canadian…

Read more »

Dividend Stocks

Want to Retire Faster? Try Doing These 3 Things

| Christopher Liew, CFA

Canadians can fast track their retirement by having a best-laid plan. Investing in a blue-chip asset like Bank of Nova…

Read more »

Dividend Stocks

Uh-Oh! The CRA Could Tax Your TFSA if You Make These 3 Mistakes

| Christopher Liew, CFA

TFSA users shouldn’t be paying taxes if the account is properly managed. Instead of storing cash, invest in National Bank…

Read more »

Bank Stocks

TFSA Investing: The Best Canadian Stocks to Buy

| Jared Seguin

Looking to add some extra strength to your TFSA investing strategy? Find out why these two TSX giants might be…

Read more »

Dividend Stocks

3 Top Canadian Stocks to Buy in April 2021

| Chris MacDonald

These three top picks could set up long-term investors with some pretty impressive growth over the long haul.

Read more »

Dividend Stocks

This 3.66% Dividend Stock Is a No-Brainer Buy

| Christopher Liew, CFA

Bank of Montreal stock isn’t the highest dividend payer on the TSX. However, it stands out as a no-brainer buy…

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.