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. 

Check back here for the most up to date information about bank stocks in Canada.

Top Articles

stock data
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 »

Elderly man giving a Christmas present to his wife
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 »

Gold bullion on a chart
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 sign on traditional europe building facade
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 sign on traditional europe building facade
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 »

A stock price graph showing growth over time
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 »

A golden egg in a nest
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

hand using ATM
Bank Stocks

2 Big Bank Stocks With Rock-Solid Dividends

| Christopher Liew, CFA

An analyst predicts that two Big Bank stocks that pay rock-solid dividends are likely to deliver the largest percentage increase…

Read more »

TFSA and coins
Bank Stocks

TFSA Investors: Here’s How to Build a Million-Dollar Portfolio

| Nicholas Dobroruka

What’s better than tax-free capital gains? The TFSA is my top choice for long-term investors looking to benefit from compound…

Read more »

money cash dividends
Tech Stocks

Long-Term Investors: These 3 High-Growth Stocks Offer Excellent Buying Opportunities

| Rajiv Nanjapla

Given the favourable business environment and healthy growth prospects, these three Canadian stocks can deliver superior returns in the long…

Read more »

money cash dividends
Dividend Stocks

5 Top TSX Dividend Stock Picks for November 2021

| Sneha Nahata

These dividend stocks are top investments to generate a reliable inflow of cash.

Read more »

stock research, analyze data
Dividend Stocks

Will the TSX Pull Back or End 2021 With a Bang?

| Christopher Liew, CFA

Despite the TSX’s new record high in November 2021, a market pullback is still possible and could dash hopes of…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Which Big 6 Bank Will Hike Dividends by 25%?

| Christopher Liew, CFA

Canada’s Big Six banks have the green light to hike dividends, and investors can expect payout increases very soon.

Read more »

Arrowings ascending on a chalkboard
Bank Stocks

2 Unstoppable Growth Stocks That Could Double Again

| Sneha Nahata

These TSX stocks have grown over 150% in one year and have the potential to double again.

Read more »

Where to Invest?
Dividend Stocks

Retirement Planning: 3 Stocks to Balance Growth With Safety

| Adam Othman

As one gets closer to retirement, the safety of capital becomes more of a priority than the growth potential.

Read more »

edit Balloon shaped as a heart
Dividend Stocks

Love Dividends? 3 Cheap Stocks to Buy This Month

| Sneha Nahata

These high-quality dividend stocks are trading cheap and are buys right now.

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Royal Bank vs. TD Bank: Which Is the Better Bank Stock to Buy in November?

| Ambrose O'Callaghan

Royal Bank of Canada (TSX:RY)(NYSE:RY) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) are two bank stocks worth watching ahead of Q4 earnings.

Read more »

hand using ATM
Bank Stocks

5 Reasons to Buy TD Bank (TSX:TD) Stock Today

| Christopher Liew, CFA

There are five reasons out of many why Canada’s second-largest bank is a must-buy blue-chip stock today.

Read more »

cryptocurrency, crypto, blockcahin
Bank Stocks

JPMorgan Reaffirms US$146,000 Price Target for Bitcoin

| Aditya Raghunath

Here's why JPMorgan is bullish on the long-term potential of Bitcoin.

Read more »

Man making notes on graphs and charts
Dividend Stocks

3 Dividend Aristocrats to Buy and Hold for 20 Years

| Christopher Liew, CFA

Long-term investors want nothing more than a band of dividend-payers in their portfolios. However, you might need to sell some…

Read more »

Couple relaxing on a beach in front of a sunset
Dividend Stocks

Retirees: Worried About a Recession? 3 Safer Stocks to Buy

| Christopher Liew, CFA

Risk-averse Canadian retirees can move to three safer stocks to calm their fears about a looming recession.

Read more »

Bank Stocks

November’s Top Value Stocks: 3 Great Options

| Chris MacDonald

Here are three top Canadian value stocks I think are incredible opportunities in this relatively overvalued market today.

Read more »

investment research
Dividend Stocks

Cornerstones in a Stock Portfolio: 2 Industry Leaders

| Christopher Liew, CFA

A stock portfolio with industry leaders as its cornerstones can withstand the inherent market risks and overcome economic downturns.

Read more »

Family relationship with bond and care
Dividend Stocks

Couples in Your 40s: Retire Early With These 3 Simple Steps

| Christopher Liew, CFA

If couples in their 40s can agree on retirement goals, plan together, and follow three simple steps, the chances of…

Read more »

Index funds
Tech Stocks

5 TSX Stocks for the Next 5 Years

| Sneha Nahata

These TSX stocks are poised to outperform the TSX 60 index and deliver higher returns.

Read more »

analyze data
Dividend Stocks

3 Top Stocks Outside the Tech Sector to Buy in November 2021

| Jed Lloren

There are many companies outside the tech sector that can generate excellent returns over the long term.

Read more »

edit Safety First illustration
Dividend Stocks

3 Stocks That Could Recession-Proof Your Money

| Christopher Liew, CFA

Three iconic Canadian brands are the top choices if you want to recession-proof your money and make your portfolio stronger.

Read more »

Bank sign on traditional europe building facade
Bank Stocks

My Top 3 Bank Stocks to Buy Before Earnings

| Ambrose O'Callaghan

I’m still looking to buy Laurentian Bank (TSX:LB) and other top Canadian bank stocks ahead of fourth-quarter earnings season.

Read more »

Bank sign on traditional europe building facade
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 »

analyze data
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 sign on traditional europe building facade
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 »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
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 »

spooky halloween
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 »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
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 »

Canadian Dollars
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 »

edit Colleagues chat over ketchup chips
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 »

Where to Invest?
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 »

analyze data
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 »

Woman has an idea
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 »

money cash dividends
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 sign on traditional europe building facade
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 »

financial freedom sign
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 »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
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 »

stock data
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 »

sad concerned deep in thought
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 »

Value for money
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 »

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.