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

2 Top TSX Stocks to Watch This Fall

| Victoria Hetherington

Find out why stocks such as Manulife Financial (TSX:MFC)(NYSE:MFC) could act as early warning indicators as the rest of the…

Read more »

Dividend Stocks

3 Top Stocks to Buy Before the September Sell-Off Ends

| Joey Frenette

I'd be itching to buy Shopify Inc. (TSX:SHOP)(NYSE:SHOP) and two other top-notch TSX stocks after the latest September sell-off.

Read more »

Dividend Stocks

3 Tips to Invest Like Warren Buffett in the Next Market Crash

| Kay Ng

Get rich from the next stock market crash by following these three Warren Buffett tips in investing.

Read more »

Dividend Stocks

3 High-Yield Dividend Champions on Sale in September!

| Andrew Button

Dividend stocks like the Canadian Tire Corp (TSX:CTC.A) are still on sale in September.

Read more »

Dividend Stocks

Top Canadian Bank Stocks: Royal Bank of Canada vs. TD Bank

| Andrew Walker

Royal Bank of Canada and TD Bank are top Canadian bank stocks with long track records of rewarding patient investors.…

Read more »

close-up photo of investor Warren Buffett
Dividend Stocks

Invest Like Buffett: Buy These 2 Stocks Today

| David Jagielski

National Bank (TSX:NA) and this other stock are great buys if you're a value investor who loves dividend income.

Read more »

Dividend Stocks

3 Canadian Dividend Rock Stars to Buy and Hold

| Victoria Hetherington

Find out why income names like Manulife Financial (TSX:MFC)(NYSE:MFC) are ideal for a long-term dividend stock portfolio.

Read more »

Dividend Stocks

3 UNDERVALUED Canadian Gems That Are Well Placed for a Post-Pandemic Recovery

| Vineet Kulkarni

Some TSX stocks might emerge stronger in the post-pandemic world. Here are three Canadian gems for long-term investors.

Read more »

Dividend Stocks

$14,000 CERB Is Ending: Start of Universal Basic Income?

| Christopher Liew, CFA

The debate on whether Canada must introduce a universal basic income after CERB and other COVID-19 aid packages will continue.…

Read more »

Bank Stocks

3 Top TSX Bank Stocks to Buy in September 2020

| Aditya Raghunath

Here's why you can look to buy stocks like the National Bank of Canada (TSX:NA) given its strong balance sheet…

Read more »

Dividend Stocks

Can You Survive Solely on Your OAS and CPP Pension?

| Christopher Liew, CFA

The shocking truth about retiring is that you risk financial hardship by relying solely on your OAS and CPP. Your…

Read more »

Dividend Stocks

Would a Donald Trump Re-Election Mean a Stronger Canadian Dollar?

| Adam Othman

The Toronto-Dominion stock could be in trouble, depending on the U.S. election results this November.

Read more »

Dividend Stocks

September to Remember: 2 TSX Stocks I’m Hoping to Buy on a Dip

| Joey Frenette

I'll be looking to double down on Bank of Montreal (TSX:BMO)(NYSE:BMO) and another Canadian value stock on a September market…

Read more »

Dividend Stocks

Sell Royal Bank of Canada (TSX:RY) Now: Buy This Stock Instead

| Ryan Vanzo

Royal Bank of Canada (TSX:RY)(NYSE:RY) is a great stock, but if you want to grow your portfolio over the long…

Read more »

Dividend Stocks

The $2,000 CRA CERB Helped Canadians Save a Record 28%

| Christopher Liew, CFA

The record 27% savings rate due to CERB indicates that Canadians look after their financial health. You can replace CERB…

Read more »

Bank Stocks

Warren Buffett: Should You Buy Bank Stocks Right Now?

| Ambrose O'Callaghan

Canadians who want to emulate Warren Buffett’s value investing mantra should pursue stocks like Bank of Nova Scotia (TSX:BNS)(NYSE:BNS).

Read more »

Dividend Stocks

This Bank Stock Is a Better Buy Than CIBC (TSX:CM) Stock

| Stephanie Bedard-Chateauneuf, MBA

National Bank of Canada (TSX:NA) stock looks like a better buy now than CIBC (TSX:CM)(NYSE:CM) stock. The Montreal-based bank is…

Read more »

Dividend Stocks

Better Buy: Growth or Value Stocks for the Next 10 Years?

| Kay Ng

Growth stocks have outperformed value stocks by 10,000 miles in the last decade. Will there be a turn of the…

Read more »

Dividend Stocks

Stock Market Crash in September 2020: 3 Key Things to Do

| Kay Ng

This is what you can do before the stock market crashes again to better prepare your mind and stock portfolio!

Read more »

Dividend Stocks

Caution: 2 Ways the CRA Could Take Back Your $14,000 CERB

| Christopher Liew, CFA

Receive CERB with caution and determine your eligibility, because the CRA is taking back inadvertent payments. However, dividend earnings from…

Read more »

Dividend Stocks

Should You Buy Royal Bank of Canada (TSX:RY) or TD Bank (TSX:TD) Stock in September?

| Andrew Button

Royal Bank of Canada (TSX:RY)(NYSE:RY) and The Toronto-Dominion Bank (TSX:TD)(NYSE:TD) both posted good earnings. Which is better?

Read more »

Bank Stocks

TD Stock vs. CIBC Stock: Which Is a Better Buy Today?

| Andrew Walker

TD (TSX:TD)(NYSE:TD) and CIBC (TSX:CM)(NYSE:CM) have enjoyed nice rallies off the March lows. Which Canadian bank stock deserves to be…

Read more »

Dividend Stocks

Should You Buy TD Bank (TSX:TD) Stock for its 4.9% Dividend Yield?

| Aditya Raghunath

Here's how investing in TD Bank (TSX:TD)(NYSE:TD) will help create a steady stream of passive dividend income.

Read more »

Coronavirus

MARKET CRASH 2.0: The Terrible Market Sell-Off I’ve Been Warning You About Is Here

| Jitendra Parashar

The Canadian and U.S. market saw major declines on Thursday after consistently rising for many weeks. Here are my key…

Read more »

Bank Stocks

1 Strong Reason Why You Should Start Loving Bank Stocks

| Sneha Nahata

Here’s why bank stocks look attractive investment options.

Read more »

Dividend Stocks

This Province’s Economy Is Most Likely to Quickly Recover From COVID-19

| Adam Othman

Buy the Canadian Western Bank stock, as it operates in a region most likely to see rapid recovery from COVID-19.

Read more »

Dividend Stocks

Scotiabank (TSX:BNS): Fined $127.5 Million for Price Fixing

| Christopher Liew, CFA

The Bank of Nova Scotia stock has a distinguished dividend track record that attracts investors. However, the spooking activities of…

Read more »

Dividend Stocks

Canada Revenue Agency: An Extra $2,000 CERB Is Available for September

| Christopher Liew, CFA

Before the new emergency measures take effect, the CRA is extending CERB one more time so Canadians can receive an…

Read more »

Tech Stocks

Market Crash 2020: 2 Undervalued Stocks for a Canadian’s Retirement Portfolio

| Nicholas Dobroruka

Find out which two market-leading companies I’m looking to add shares of today because of the low valuation.

Read more »

Dividend Stocks

CIBC (TSX:CM): The New Best Bank for Your Buck?

| Joey Frenette

CIBC (TSX:CM)(NYSE:CM) looks to have finally closed the valuation gap with its Canadian bank peers, but how long will it…

Read more »

Dividend Stocks

Housing Bubble: Will it Pop Soon?

| Christopher Liew, CFA

A housing crash is unlikely to happen soon. The market is weak, because are no sellers and buyers during the…

Read more »

close-up photo of investor Warren Buffett
Dividend Stocks

Billionaire Diaries: What Did Warren Buffett Buy on His 90th Birthday?

| Puja Tayal

Warren Buffett celebrated his 90th birthday in August with some interesting stock purchases. What can you take away from Buffett’s…

Read more »

Bank Stocks

Scotiabank (TSX:BMO) vs. Bank of Montreal (TSX:BMO) After Earnings

| Ambrose O'Callaghan

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), or Scotiabank, and Bank of Montreal (TSX:BMO)(NYSE:BMO) released their Q3 2020 earnings in August.

Read more »

Dividend Stocks

Dividend Investing: 2 TSX Stars to Watch

| Jared Seguin

If you're looking for some dividend investing stars, these two TSX giants are great options. They both have big and…

Read more »

Dividend Stocks

2 Things Buffett Is Doing to Avoid Losing Money

| Puja Tayal

Many analysts are touting a second market crash when the government aid eases. See what Warren Buffett is doing to…

Read more »

Dividend Stocks

3 Dividend Aristocrat Stocks That Haven’t Cut Dividends in the Pandemic

| Adam Othman

The pandemic has decimated the earnings of many businesses. Several Dividend Aristocrats have slashed their dividends, even if it is…

Read more »

Bank Stocks

WARNING: Warren Buffett’s Just Gave Another Signal for a Market Crash

| Jitendra Parashar

The legendary investor Warren Buffett’s recent moves could be an early signal for an upcoming terrible economic slowdown and a…

Read more »

Bank Stocks

Warning: Canada’s Bank Stocks Face a Deferral Cliff

| Vishesh Raisinghani

Canadian bank ETFs like BMO Equal Weight Canadian Banks Index ETF (TSX:ZEB) are trading at high valuations while an incoming…

Read more »

Dividend Stocks

3 TSX Dividend Stocks for First-Time Investors to Buy in September

| Vineet Kulkarni

Some high-quality, dividend-paying TSX stocks look attractive at the moment. Consider these stocks for solid long-term total return potential.

Read more »

Dividend Stocks

You’re Making a Big Mistake If You Rely ONLY on the OAS and CPP Pension

| Christopher Liew, CFA

You’re mistaken if you were to rely only on the OAS and CPP. It’s a must to supplement the pensions…

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.