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

edit Four girl friends withdrawing money from credit card at ATM
Dividend Stocks

3 Bank Stocks to Buy if They Get Hammered Any Lower

| Jason Hoang

Bank stocks on the TSX are constantly dipping, carving out an opportunity for long-term investors to capitalize on the situation…

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

Lock in a 5.16% Yield With TD Bank’s (TSX:TD) Stock

| Mat Litalien, MBA

Now is the time to buy Toronto-Dominion Bank's (TSX:TD) stock. TD Bank's dividend yield is now at levels not seen…

Read more »

Knowledge concept with quote written on wooden blocks
Dividend Stocks

Canada Revenue Agency: Pay Fewer Taxes Due to This 2020 CRA Update

| Adam Othman

Leverage this significant CRA update, so you have to pay fewer taxes and invest in the Scotiabank stock.

Read more »

Payday ringed on a calendar
Dividend Stocks

How to Generate $1,000 a Month in Dividends From Shares

| Kay Ng

Get $1,000 a month in dividends from these dividend stocks that are on sale. They include TD Bank (TSX:TD)(NYSE:TD) stock,…

Read more »

Dice engraved with the words buy and sell
Dividend Stocks

Dividend Investors: These 3 52-Week Low Stocks Are Screaming Buys Today

| Nelson Smith

Bank of Montreal (TSX:BMO)(NYSE:BMO), Pembina Pipeline (TSX:PPL) and Canadian National Railway (TSX:CNR)(NYSE:CNI) are all at a fresh 52-week low. Time…

Read more »

edit Colleagues chat over ketchup chips
Dividend Stocks

CPP Pension Users: 3 Horrifying Truths About Retirement

| Christopher Liew, CFA

The more you learn about the harsh truths about retirement, the better you can prepare. Start the preparing by saving…

Read more »

Family relationship with bond and care
Dividend Stocks

Income Investors: 2 Oversold Dividend-Growth Stocks for a TFSA Pension

| Andrew Walker

Top dividend-growth stocks on sale.

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

Sitting on a Cash Pile? Now’s the Time to Buy These 2 Stocks

| Christopher Liew, CFA

One rule of wealth is that money begets money. Saving but keeping cash idle will not make you rich. Your…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Dividend Stocks

Market Crash: A Top Contrarian Stock for Canadian Investors to Buy Today

| Matt Smith

By attractively valued Bank of Nova Sccotia (TSX:BNS)(NYSE:BNS) today and lock-in a 6% yield.

Read more »

Businessmen teamwork brainstorming meeting.
Dividend Stocks

2 Stocks That Just Hung Out a Giant FOR SALE Sign

| Adam Othman

The CIBC stock and Suncor stock are attractively valued yet high-quality assets you might want to consider buying on the…

Read more »

A close up image of Canadian $20 Dollar bills
Bank Stocks

Canadian Investors: 1 High-Yielding, Dirt Cheap Stock

| Jared Seguin

With the recent market plummet, Canadian investors can secure a sizeable dividend with shares of BMO (TSX:BMO)(NYSE:BMO).

Read more »

Volatile market, stock volatility
Energy Stocks

Market Crash 2020: TSX Stocks Suffer Worst Decline Since 1987

| Aditya Raghunath

Why did the Canadian equity markets fall by 10.7% yesterday?

Read more »

You Should Know This
Dividend Stocks

TFSA Investors: 3 Common Mistakes to Avoid in 2020

| Aditya Raghunath

TFSA investors need to avoid overcontributing to their account. They also need to understand the impact of capital gains and…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Canadian Bank Stocks Are On Sale: Which Dividend Stock is the Safest?

| Kay Ng

Market corrections can be nerve-racking, but you should stay calm if you're invested in Canadian bank stocks, especially if you're…

Read more »

Teamwork and team spirit
Dividend Stocks

TFSA Contribution 2020: 2 Dividend Stocks I’m Buying With My Extra $6,000

| Nelson Smith

I just put my TFSA contribution to work in Royal Bank (TSX:RY)(NYSE:RY) and Polaris Infrastructure (TSX:PIF). Here's why you should…

Read more »

Volatile market, stock volatility
Dividend Stocks

Retiree Investors: 2 Cheap Dividend Stocks to Boost TFSA Income

| Andrew Walker

The market sell-off is producing great opportunities for TFSA income investors.

Read more »

hand using ATM
Dividend Stocks

Why Toronto-Dominion Bank (TD) Stock Price Fell 5.6% in February

| Karen Thomas, MSc, CFA

TD Bank stock (TD) price falls on general market weakness, concerns regarding economic growth and rising credit losses. Look for…

Read more »

Growth from coins
Bank Stocks

Market Crash: A Top Canadian Dividend Stock for Contrarian TFSA Investors

| Andrew Walker

Top Canadian dividend stocks are becoming oversold. Is this the right time for contrarian investors to buy?

Read more »

falling red arrow and lifting
Dividend Stocks

Buy These 2 Stocks on the TSX Market Dip

| Adam Othman

The Canada Natural Resources stock and Toronto-Dominion stock could be excellent buys on the dip right now amid recession fears.

Read more »

Family relationship with bond and care
Dividend Stocks

Retirement Planner: Get These 3 Things Done Before You Retire

| Christopher Liew, CFA

Retirement planning requires early and diligent preparation. Also, boosting cash reserves with the Scotiabank stock and Capital Power stock should…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

How to Reach $800,000 in Your TFSA by Investing Just $500 a Month

| Kay Ng

Bank of Montreal (TSX:BMO)(NYSE:BMO) stock offers an attractive yield of 5% at a discounted valuation. It’s time to buy on…

Read more »

TIMER SAYING TIME FOR ACTION
Dividend Stocks

TSX Stock Investors: See the 1 Sector to Sell in March!

| Victoria Hetherington

After trimming one sector from portfolios, TSX stock investors should consider buying Manulife Financial Corp. (TSX:MFC)(NYSE:MFC).

Read more »

Volatile market, stock volatility
Dividend Stocks

My Stock Portfolio Game Plan in This Market Correction

| Kay Ng

Have a stock investing game plan so you can better handle and take advantage of market corrections and crashes. Here's…

Read more »

Modern buildings in business district
Dividend Stocks

Become a Dividend Stock Millionaire Faster From a Market Crash

| Kay Ng

Market corrections and crashes are opportunities for you to build your wealth faster over the long run. Consider TD Bank…

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

Updated: Ranking Canada’s Best Bank Stocks for the Rest of 2020

| Nelson Smith

Both Royal Bank (TSX:RY)(NYSE:RY) and TD Bank (TSX:TD)(NYSE:TD) look to be screaming buys over both the short and long-term.

Read more »

Female hand holding piggy bank. Save money and financial investment
Bank Stocks

BMO (TSX:BMO) and Scotiabank (TSX:BNS): 2 Top Dividend Stocks to Add to Your TFSA in March

| Ambrose O'Callaghan

TFSA investors should consider picking up top bank stocks like Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) in this choppy market.

Read more »

Cogs turning against each other
Dividend Stocks

TFSA Investors: 3 Safe Stocks That Pay up to 5.6%

| David Jagielski

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and these other dividend stocks offer great payouts that can help your portfolio grow over…

Read more »

A golden egg in a nest
Dividend Stocks

How to Retire Comfortably With “Just” $697,000

| Kay Ng

You may be able to retire earlier with less savings than you think. Here's how you can retire more than…

Read more »

Family relationship with bond and care
Dividend Stocks

RBC (TSX:RY) is a Bank Stock to Buy and Never, Ever Sell

| Adam Othman

Royal Bank stock is the leading company on the TSX and the largest bank in the country.

Read more »

Overhead shot of young adults using technology at a table
Dividend Stocks

TFSA Wealth 101: How Young Investors Can Turn $20,000 Into $400,000 in 20 Years

| Andrew Walker

Buying top dividend stocks on the dips can result in big long-term gains.

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

Top Canadian Dividend Stocks: 2 High-Yield Picks for a TFSA Income Portfolio

| Andrew Walker

The market correction is giving income investors an opportunity to get above-average yield from top-quality dividend stocks.

Read more »

Road signs rerouting traffic
Dividend Stocks

Top Canadian Stocks To Avoid on the BOC Interest Rate Cut

| Mat Litalien, MBA

Laurentian Bank (TSX:LB) and Fairfax Financial (TSX:FFH) stocks could be further pressured by the recent Bank of Canada interest rate…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Income Investors: A Top Canadian Dividend Stock Yielding 5% for Your TFSA

| Andrew Walker

Top Canadian dividend stocks are getting cheap.

Read more »

edit Four girl friends withdrawing money from credit card at ATM
Dividend Stocks

CRA Tax Tips: 3 Ways to Stay Tax-Free With Your RRSP and TFSA

| Christopher Liew, CFA

The way to stay tax-free with your RRSP and TFSA is not to commit mistakes that will cause tax penalties.…

Read more »

edit Businessman using calculator next to laptop
Bank Stocks

TFSA Pension: A Cheap Canadian Dividend Champion to Start a Self-Directed Retirement Portfolio

| Andrew Walker

This top TSX Index stock is now trading near its 12-month low.

Read more »

You Should Know This
Dividend Stocks

Market Selloff: These 3 Value Stocks Just Got Ludicrously Cheap

| Nelson Smith

You won't believe how cheap TD Bank (TSX:TD)(NYSE:TD), Transcontinental (TSX:TCL.A) and Great Canadian Gaming (TSX:GC) shares are today.

Read more »

Financial technology concept.
Dividend Stocks

Buying Opportunity: Canada’s Fastest-Growing Bank Stock Just Plunged 25%

| Nelson Smith

Equitable Group (TSX:EQB) is one of the best growth stories in Canada. It has now become one of the cheapest…

Read more »

New year 2020 celebration. Gold foil balloons
Dividend Stocks

Dirt-Cheap Dividend Stocks to Buy in March 2020

| Kay Ng

Buy cheap dividend stocks like Scotiabank (TSX:BNS)(NYSE:BNS) stock to receive more dividend income while beating the market!

Read more »

Economic Turbulence
Bank Stocks

Canada Revenue Agency: Here’s 1 Silly TFSA Mistake to Avoid in 2020

| Jason Hoang

A lot of TFSA users make this one silly mistake that ends up costing them big money. Here’s what it…

Read more »

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

5 Minutes a Day Can Build Money Habits That Could Make You Rich

| Christopher Liew, CFA

Rich people have specific money goals, save like clockwork, and invest in quality assets like the Royal Bank of Canada…

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.