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

What Do Experts Think of a Stock Market Correction in 2021?

| Vineet Kulkarni

Will stock markets correct this year as well amid growing COVID-19 cases in many parts of the world? Let’s see…

Read more »

Dividend Stocks

Millennials: Turn Your TFSA Contribution Into $9.5 Million by Retirement

| Amy Legate-Wolfe

You can absolutely retire a millionaire in only 25 years by building strong habits now and reaping the rewards later!

Read more »

Dividend Stocks

1 TSX Stock That Could Help You Retire Wealthy

| Christopher Liew, CFA

The lack of commitment is the reason most people can’t retire wealthy. Turn your dream into reality and invest in…

Read more »

Dividend Stocks

Millennials: 4 Tips to Start Investing Today!

| Amy Legate-Wolfe

Millennials: here are tips on getting started and making millions by the time you retire.

Read more »

Tech Stocks

Forget Shopify: Buy These 4 High-Growth Stocks Instead

| Sneha Nahata

If you are looking for stocks that could deliver Shopify-like returns, consider buying these high-growth TSX stocks now.

Read more »

Dividend Stocks

How Much Should You Have in an Emergency Fund?

| Amy Legate-Wolfe

Everyone needs an emergency fund, and there's a simple way to figure out how much you need and fund it…

Read more »

Dividend Stocks

The 5 Best High-Yield TSX Stocks to Buy Right Now

| Sneha Nahata

Amid uncertainty and lower interest rates, squeeze out steady and higher yields from the top dividend-paying stocks.

Read more »

Tech Stocks

Canadians: This TSX-Traded Company Holds 16,402 Bitcoins

| Joey Frenette

Galaxy Digital Holdings Ltd. (TSX:GLXY) is a top TSX-traded crypto and Bitcoin play that most Canadian investors have probably never…

Read more »

Dividend Stocks

TFSA Investors: Should You Buy Enbridge Stock or Royal Bank Stock?

| Andrew Walker

Enbridge and Royal Bank are giants in the TSX Index. As the post-pandemic recovery takes hold, which stock might be…

Read more »

Dividend Stocks

TFSA Investing: 2 Reliable Blue-Chip Stocks

| Jared Seguin

When it comes to TFSA investing, reliability and stability are ideal traits to pursue. These two TSX names provide those…

Read more »

Dividend Stocks

1 Easy Investing Hack to Put Away Thousands in Your Savings Account Per Year

| Amy Legate-Wolfe

Even if you have $0 invested today, you could have thousands by using this easy investing hack coupled with dividend…

Read more »

Dividend Stocks

5 Undervalued TSX Stocks I’d Buy Now With $5,000

| Sneha Nahata

I see an opportunity in several fundamentally strong TSX-listed stocks to buy them at a lower valuation.

Read more »

Dividend Stocks

The 3 Best TSX Stocks Under $100 to Buy Today

| Nicholas Dobroruka

There’s no need to break the bank if you’re looking to own top TSX stocks. Here are three picks all…

Read more »

Bank Stocks

1 Top TSX Bank Stock to Buy Today

| Chris MacDonald

Here's why Scotiabank (TSX:BNS)(NYSE:BNS) remains a top pick of mine in the Canadian banking sector today.

Read more »

Bank Stocks

TD Bank Stock Could Be April’s Best Canadian Bank for Your Buck!

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) stock could be on the cusp of a massive bull run, as Canadian banks continue to ascend…

Read more »

Tech Stocks

Got $1,000? The 2 Best Undervalued TSX Stocks to Buy Right Now

| Nicholas Dobroruka

Canadian stocks are soaring, but don’t think it’s too late to get into the market. Here are two companies that…

Read more »

Dividend Stocks

Is $50 on the Cards for Air Canada (TSX:AC) Stock After its Epic Bailout Package?

| Vineet Kulkarni

After months-long negotiations and delays, Air Canada (TSX:AC) and the Canadian government have found some common ground.

Read more »

Tech Stocks

3 Top TSX Stocks to Buy With $3,000 in April 2021

| Sneha Nahata

Despite the near-term challenges, long-term investors should continue to invest in fundamentally strong companies for solid returns.

Read more »

Dividend Stocks

5 of the Best TSX Dividend Stocks to Buy Under $100

| Sneha Nahata

It makes sense to buy and hold top dividend stocks for regular income, even when the volatility remains high in…

Read more »

Dividend Stocks

3 Rallying TSX Stocks That Corrected up to 30% Last Week: Time to Buy?

| Vineet Kulkarni

Stretched valuations of some top-rallying TSX stocks seem to have started bothering discerned investors. What should one do?

Read more »

Dividend Stocks

4 Dividend Stocks to Buy and Hold for Decades

| Rajiv Nanjapla

These four Dividend stocks can deliver stable passive income and also stabilize your portfolio.

Read more »

Dividend Stocks

Got $1,000? 3 Top TSX Stocks to Buy Right Now

| Vineet Kulkarni

While markets at large are lingering at all-time highs, some TSX stocks are still trading well below their fair values.

Read more »

Dividend Stocks

Buy the Dip: Enbridge (TSX:ENB)

| Puja Tayal

The rule ‘buy the dip sell the rally’ looks simple but difficult to implement. But with Enbridge (TSX:ENB)(NYSE:ENB), you only…

Read more »

Dividend Stocks

3 Cheapest Places in Canada to Retire

| Christopher Liew, CFA

Canada has several welcoming communities, but three of them should appeal more to retirees. Would-be retirees could boost future pensions…

Read more »

Dividend Stocks

Got $1,000 to Spend? Invest in These 2 Stocks Instead!

| Christopher Liew, CFA

If you only have $1,000 to invest, don’t let the money go to waste. Invest in top-notch dividend payers like…

Read more »

Dividend Stocks

TD Bank (TSX:TD): Is a Huge Acquisition About to Happen?

| Christopher Liew, CFA

Canada’s second-largest bank is open to mergers and acquisitions in the U.S. in 2021. If you’re saving for retirement, invest…

Read more »

Dividend Stocks

The Biggest Mistake Investors Are Making Right Now

| Amy Legate-Wolfe

Investors continue to make the same mistake over and over, and they're missing out on some incredible opportunities in the…

Read more »

Dividend Stocks

Parents of Canada: Use the RESP to Set Your Child Up for Success

| Christopher Liew, CFA

The RESP in Canada is the excellent tool of parents to prepare their children for future success. To boost the…

Read more »

Dividend Stocks

2 Dividend Stocks With a Payout Streak of Over 188 Years

| Christopher Liew, CFA

Bank of Montreal stock and Bank of Nova Scotia stock are prestigious names in Canada and the TSX. Both banks…

Read more »

Bank Stocks

The 3 Best Bank Stocks to Buy as the Economy Recovers

| Ambrose O'Callaghan

Canadians should snatch up bank stocks like Royal Bank of Canada (TSX:RY)(NYSE:RY) as the economy recovers in 2021.

Read more »

Dividend Stocks

What Kind of Stock Investor Are You?

| Kay Ng

Are you looking for income or wealth creation? These examples can help you understand what kind of investor you are.

Read more »

Tech Stocks

5 Top TSX Stocks to Buy Right Now With $5,000

| Sneha Nahata

The recovery in demand, economic expansion, and corporate earnings growth are likely to support the uptrend in stocks

Read more »

Dividend Stocks

Dividend Investing: 2 Reliable TSX Gems

| Jared Seguin

When it comes to TSX dividend investing, there are plenty of options. However, not all dividend stocks offer as reliable…

Read more »

Dividend Stocks

Worried About a Correction? 3 Top Canadian Stocks to Buy Right Now

| Chris MacDonald

Here's why these three companies continue to top my charts as the best picks for long-term investors today.

Read more »

Dividend Stocks

Got $1,000? 3 Top TSX Stocks to Buy Right Now

| Vineet Kulkarni

Canadian stocks at large are up 40% in the last 12 months. Here are three TSX stocks that offer decent…

Read more »

Dividend Stocks

Got $3,000? 3 Top TSX Dividend Stocks to Buy Amid Volatility

| Sneha Nahata

Amid heightened volatility, it makes sense to invest in dividend stocks for steady income flow.

Read more »

Dividend Stocks

Value Stocks Could Outpace Growth Stocks in 2021: 3 TSX Stocks to Buy Today With $500

| Vineet Kulkarni

As TSX stocks at large linger around all-time highs, investors might turn cautious about their premium valuations and switch to…

Read more »

Dividend Stocks

3 Top Value Picks to Get the Most Bang for Your Buck

| Jed Lloren

There’s a massive shift from growth to value right now. Where should you put your money?

Read more »

Dividend Stocks

TFSA Investing: 2 Canadian Dividend Giants

| Jared Seguin

If you're looking to add some stocks to your TFSA investing plan, these dividend heavyweights are ideal options for the…

Read more »

Dividend Stocks

Barrick Gold (TSX:ABX) Stock Continues to Trade Weak: What Should Investors Do?

| Vineet Kulkarni

Barrick Gold (TSX:ABX)(NYSE:GOLD) stock has lost 35% in the last six months, notably underperforming TSX stocks at large. What should…

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.