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

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

Business success with growing, rising charts and businessman in background
Tech Stocks

2 Growth Stocks to Consider Adding to Your Portfolio

| Jed Lloren

Which two companies do I think have immense upside in the future?

Read more »

Growing plant shoots on coins
Dividend Stocks

TFSA Investors: Should You Buy Fortis (TSX:FTS) or Toronto-Dominion Bank (TSX:TD) for Dividend Income?

| Karen Thomas, MSc, CFA

There are many good reasons for TFSA investors to buy both Fortis stock and TD Bank stock, but this Motley…

Read more »

Bad apple with good apples
Dividend Stocks

The Surprising 2 Stocks You Should Avoid

| Chris MacDonald

Knowing which stocks to exclude is as important as knowing which stocks to include in your portfolio. My two picks…

Read more »

Value for money
Bank Stocks

3 Undervalued Bank Stocks Yielding up to 6.2%

| Aditya Raghunath

Should stocks such as Bank of Nova Scotia, TD Bank, and Laurentian Bank be on your watch list?

Read more »

Value for money
Stocks for Beginners

3 UNDERVALUED TSX Bank Stocks Yielding Above 4%

| Vineet Kulkarni

While TSX stocks at large soared almost 45% in the last four months, bank stocks have notably lagged the rally.

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

Worried About Inflation? 3 Dividend-Growth Stocks To Protect You From Rising Prices

| Kyle Walton

These three fast-growing stocks provide growing streams of dividend income that can help you withstand inflationary pressures.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Income Investors: $10,000 in This TSX Stock Will Pay You $576 in Annual Dividends

| Aditya Raghunath

Here's why you can look to buy this 5.76% yielding Canadian financial heavyweight.

Read more »

edit Balloon shaped as a heart
Bank Stocks

Love Dividends? These 3 Undervalued Stocks Are Looking Attractive

| Sneha Nahata

These undervalued stocks offer high and safe yields amid challenges.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

418,500 New Canadian Jobs: Be Proud, Canada!

| Christopher Liew, CFA

The Canadian economy is recovering faster than the U.S. with the reclaiming of 55% of job losses since the COVID-19…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

2 Undervalued Bank Stocks Yielding Over 5%

| Kay Ng

Some of the soundest banks in the world -- the big Canadian banks -- are cheap this year. Get big…

Read more »

Increasing yield
Dividend Stocks

TFSA Investors: 2 Safe Dividend Stocks Yielding up to 5.4%

| David Jagielski

Bank of Montreal (TSX:BMO)(NYSE:BMO) and this other stock can be great sources of recurring cash flow for your portfolio for many…

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Tech Stocks

Warren Buffett: Bet on This Stock Right Now!

| Ryan Vanzo

Warren Buffett is avoiding stocks like Air Canada (TSX:AC). He'd much rather buy back Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) shares.

Read more »

Bank sign on traditional europe building facade
Bank Stocks

3 Top TSX Stock Picks for This Week

| Amy Legate-Wolfe

Earnings reports will soon be fired our way from all bank stocks, but these three provide the best opportunity for…

Read more »

hand using ATM
Dividend Stocks

190,000 Canadians Had to Give Back the $2,000 CERB: Make Sure You Don’t!

| Christopher Liew, CFA

Make sure you meet the eligibility requirements when you apply for CERB. The CRA will demand repayment from recipients who…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

TFSA Investors: 3 Top Dividend Stocks on Sale in August!

| Andrew Button

If you're looking for a quality stock to stash in your TFSA, consider the Toronto-Dominion Bank (TSX:TD)(NYSE:TD).

Read more »

Businessmen teamwork brainstorming meeting.
Dividend Stocks

Better Buy: Sun Life Financial (TSX:SLF) or Toronto-Dominion Bank (TSX:TD)?

| Karen Thomas, MSc, CFA

The coronavirus pandemic has hit these financial stocks, with Toronto-Dominion Bank stock facing greater headwinds than Sun Life Financial stock…

Read more »

Piggy bank next to a financial report
Bank Stocks

Got $2,500 to Invest in Your TFSA? These Stocks Could Turn it Into $65,000!

| Andrew Walker

Here are the top stocks for new TFSA investors.

Read more »

Canadian Dollars
Bank Stocks

WARNING: Here’s When the CRA Will Take Back CERB

| Amy Legate-Wolfe

Whether or not CERB is coming to an end, it looks like CRA could be coming for that cash very…

Read more »

Family relationship with bond and care
Dividend Stocks

CRA CERB Program Ending: Prepare Now!

| Debra Ray

Prepare for the end of the CRA's Canada Emergency Response Benefit by investing in shares of dividend stocks like BCE…

Read more »

Coronavirus written newspaper close up shot to the text.
Dividend Stocks

CRA Wealth: How You Can Receive $12,400 in COVID Breaks in 2020

| Christopher Liew, CFA

Canadians have CRA wealth during the pandemic through the various COVID-19 breaks. All of them, however, are fleeting. If you…

Read more »

Knowledge concept with quote written on wooden blocks
Dividend Stocks

CRA Wealth: How to Build Your Own $2,000/Month CERB

| Adam Othman

Generate your own $2,000 per month passive income through a stock like Bank of Nova Scotia as an ideal long-term…

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

Bank of Montreal (TSX:BMO): Should You Buy Before a Big Bank Bounce?

| Joey Frenette

Bank of Montreal (TSX:BMO)(NYSE:BMO) looks like the best bank for your buck as the Canadian economy looks to recover from…

Read more »

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

3 Top TSX Stocks That Could TRIPLE in 1 Year!

| Amy Legate-Wolfe

There are plenty of TSX stocks out there that could bring in plenty of cash, but I would say only…

Read more »

Hands holding trophy cup on sky background
Dividend Stocks

Got $2,000? Invest in These 2 Top TFSA Stocks!

| Victoria Hetherington

Discover today why top TSX stocks like TD Bank (TSX:TD)(NYSE:TD) are practically tailor-made for a Tax-Free Savings Account.

Read more »

woman data analyze
Dividend Stocks

Is Your CRA CERB Ending Soon? Do This to Keep Getting $2,000 a Month

| Kay Ng

Don't worry if your CRA CERB is running out, because you can get $2,000 a month from doing this.

Read more »

Modern buildings in business district
Dividend Stocks

Bargain Alert: 3 High-Yield Financial Stocks on Sale Right Now

| Kyle Walton

Since March, these three blue-chip financial stocks have offered higher dividend yields than they have at any time in the…

Read more »

office buildings
Dividend Stocks

8.5 Million Canadians Received CERB — but It Will End Soon

| Christopher Liew, CFA

With CERB reaching its end game, it would be good to start saving after the pandemic. You can use your…

Read more »

Mature financial advisor showing report to young couple for their investment
Dividend Stocks

$2,000 CRA CERB Will End Soon But EI Can Save the Day

| Christopher Liew, CFA

The 21st century EI will be the next saviour of Canadians after CERB. Again, the new benefit scheme is temporary.…

Read more »

edit Close-up Of A Piggybank With Eyeglasses And Calculator On Desk
Dividend Stocks

TFSA Savers: Sick of Low Interest Rates? 2 Great Dividend Stocks to Buy and Hold

| Joey Frenette

Bank of Montreal (TSX:BMO)(NYSE:BMO) and another TFSA-worthy dividend stock blow low-interest savings accounts out of the water.

Read more »

A golden egg in a nest
Dividend Stocks

Canada Revenue Agency: How to Generate $7,800 in Extra Annual Pension Income and Avoid OAS Clawbacks

| Aditya Raghunath

Here's how retirees can avoid OAS clawbacks and supplement their retirement income by investing in dividend stocks.

Read more »

edit Businessman using calculator next to laptop
Stocks for Beginners

3 TSX Stocks for 1st-Time Investors to Buy in August

| Vineet Kulkarni

Here are three top TSX stocks that are trading cheap. Their current discounted valuation indicates more room for upside from…

Read more »

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

How to Get Rich From Stock Investing

| Kay Ng

Everyone can get richer from investing in stocks. Here are a couple of ways you can do so.

Read more »

Happy Retirement” on a road
Dividend Stocks

Dividend Investors: 3 Top Stocks for a TFSA Retirement Fund

| Andrew Walker

Check out these three top stocks for TFSA investors today.

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

3 Top Stocks I’m Buying, as Another Stock Market Crash Might Not Come in 2020

| Sneha Nahata

Here are three stocks worth buying, as the stock market might not crash again.

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Should You Buy TSX Bank Stocks or This 1 ETF?

| Victoria Hetherington

Should investors buy individual bank stocks or the the BMO Equal Weight Banks Index ETF (TSX:ZEB) in the current market?

Read more »

Money growing in soil , Business success concept.
Bank Stocks

CRA Tax Break: Turn $500 Into $10,000 Tax Free!

| Amy Legate-Wolfe

There has been a lot of press around pandemic benefits, but there's one tax break most people can apply for.…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

3 Canada Bank Stocks to Buy Ahead of Earnings

| Ambrose O'Callaghan

Investors should look to snag discounted bank stocks like Toronto-Dominion Bank (TSX:TD)(NYSE:TD) ahead of earnings season.

Read more »

Growth from coins
Dividend Stocks

Dividend Stars: 2 TSX Giants to Buy

| Jared Seguin

Looking to pick up a TSX giant yielding big in today's market? These two TSX dividend stars should be solid…

Read more »

Simple life style relaxation with Asian working business woman healthy lifestyle take it easy resting in comfort hotel or home living room having free time with peace of mind and self health balance
Bank Stocks

3 Steps to Make Passive Income With Just $1,000

| Vishesh Raisinghani

Passive-income strategies must focus on dividend-growth stocks such as Royal Bank of Canada (TSX:RY)(NYSE:RY).

Read more »

A stock price graph showing declines
Dividend Stocks

Warren Buffett: Another Stock Market Crash?

| Debra Ray

Warren Buffett is investing in bank stocks, should you buy the Royal Bank of Canada (TSX:RY)(NYSE:RY) or is another market…

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.