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

Bank sign on traditional europe building facade
Dividend Stocks

Invest in National Bank of Canada (TSX:NA) Today and Beat the Market in 2020

| Matt Smith

Buy National Bank of Canada (TSX:NA) today, lock-in a 3.9% dividend yield and beat the market in 2020.

Read more »

Index funds
Dividend Stocks

Invest Like the Pros With 2 CPP Pension Stocks

| Adam Othman

Invest in Enbridge and Royal Bank stocks so that you can capitalize on the potential these CPP stocks offer for…

Read more »

Profit dial turned up to maximum
Dividend Stocks

TFSA Investors: 5 Stocks for a 5% Yield

| Kris Knutson

If you have not yet opened a TFSA account, do so soon and buy five stocks, like Bank of Nova…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

TFSA Users: My Top 3 Canadian Bank Stocks

| Ambrose O'Callaghan

TFSA investors can get on the right track this decade by targeting stocks like Royal Bank of Canada (TSX:RY)(NYSE:RY).

Read more »

Growth from coins
Dividend Stocks

TFSA Investors: 3 Safe and Cheap Dividend Stocks to Buy in 2020

| Stephanie Bedard-Chateauneuf, MBA

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is one of the three dividend stocks I suggest to buy in 2020.

Read more »

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

TFSA Investors: 2 Top TSX Index Stocks That Could Deliver Big Gains in 2020

| Andrew Walker

Investors can still find cheap stocks in the TSX Index today.

Read more »

Economic Turbulence
Bank Stocks

Is 2020 the Year of Reckoning for CIBC’s (TSX:CM) Mortgage Loans?

| Adam Othman

Canadian Imperial Bank of Commerce might finally start to feel the effects of unpaid mortgage loans by Canadian amid rising…

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Dividend Stocks

Canada Revenue Agency: 3 Things to Lower Your Taxes in 2020

| Kay Ng

Lower the taxes you pay to the CRA with TFSAs and dividends. Here are two dividend stocks that offer out-of-this-world…

Read more »

Hands holding trophy cup on sky background
Dividend Stocks

I Just Bought This Stock for My TFSA Freedom Fund

| Nelson Smith

I just added Royal Bank of Canada (TSX:RY)(NYSE:RY) to my TFSA. Here's why.

Read more »

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

Millennial Savings: Cut 3 Big Costs to Invest More for Your Retirement

| Kay Ng

Cut costs and save to invest more for your retirement. You can thank your diligent self later!

Read more »

Paper airplanes flying on blue sky with form of growing graph
Dividend Stocks

RRSP Investors: Enrich Your Retirement With These Growth Stocks

| Victoria Hetherington

Kinaxis Inc. (TSX:KXS) and one other outperforming stock can add upside to a portfolio built around retirement wealth creation.

Read more »

Champagne poured into a row of flutes
Dividend Stocks

The Road to Riches: 3 Paths You Can Take to Get Rich in 2020

| Christopher Liew, CFA

Becoming rich in 2020 is not a fantasy for regular investors. You can make it a reality by following the…

Read more »

Where to Invest?
Dividend Stocks

Forget GICs: 2 Top Canadian Income Stocks Yielding 5% for Retirees

| Andrew Walker

These Canadian companies pay investors reliable distributions with attractive yields.

Read more »

Growing plant shoots on coins
Bank Stocks

2020 TFSA Contribution Room: 2 Canadian Stocks to Grow Your $6,000 Yearly Contribution to $1.5M

| Simon Wong

Implement this simple TFSA strategy with TD Bank (TSX:TD)(NYSE:TD) and Restaurant Brands International (TSX:QSR)(NYSE:QSR) to build wealth faster.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

2020 TFSA Contribution Room: This 3-Item Checklist Will Make You Rich

| Kay Ng

Here’s a proven method to building tax-free wealth with Toronto-Dominion Bank (TSX:TD)(NYSE:TD) as an example.

Read more »

Canadian Dollars
Dividend Stocks

2 Stocks With Double-Digit Earnings Potential

| Demetris Afxentiou

These two stocks offer investors impressive long-term growth and income-earning potential to keep your portfolio on autopilot for a decade…

Read more »

Profit dial turned up to maximum
Dividend Stocks

RRSP Contribution Deadline: 3 Discounted Dividend Stocks for 2020

| Kay Ng

Boost your retirement income immediately with juicy dividend stocks such as Freehold Royalties (TSX:FRU) and CIBC (TSX:CM)(NYSE:CM)!

Read more »

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

TFSA Users: 3 Dividend Stocks for Tax-Free Income the Canada Revenue Agency Can’t Touch!

| Andrew Button

If you're looking for TFSA income, look no further than Enbridge Inc (TSX:ENB)(NYSE:ENB) stock.

Read more »

Bank sign on traditional europe building facade
Bank Stocks

This 1 Booming Bank Stock Is Perfect for Frugal Canadian Investors

| Jason Hoang

TD Bank stock has been booming and is one of Canada's premier dividend stocks. The company has shown explosive and…

Read more »

Index funds
Dividend Stocks

Sidestep the CRA and Secure Your Retirement With Dividend Income

| Kay Ng

Rest assured that your retirement income is secure even in a recession when you hold dividend stocks like Bank of…

Read more »

Road signs rerouting traffic
Bank Stocks

I Wouldn’t Touch This 1 Stock With a 10-Foot Pole!

| Chen Liu

Laurentian Bank is trading at fair value. Avoid this stock in your TFSA and RRSP.

Read more »

Man holding magnifying glass over a document
Energy Stocks

Identifying Opportunities in Latin America

| Matt Smith

Buy Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Brookfield Renewable Partners L.P. (TSX:BEP.UN)(NYSE:BEP) to benefit from stronger growth in Colombia.

Read more »

Family relationship with bond and care
Bank Stocks

Cost of Tuition Got You Scared in 2020? The RESP Can Save the Day

| Christopher Liew, CFA

The cost of tuition is skyrocketing. Get ahead of by opening a RESP for your child. Invest in CIBC stock…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

TFSA Investors: How to Turn Your $10,000 Into $100,000

| Mat Litalien, MBA

Growing your wealth isn't hard and can be achieved by investing in a simple stock such as Toronto-Dominion Bank (TSX:TD)(NYSE:TD.

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

2020 Could Be the Year That Debt Catches Up to the Big 5 Banks

| Christopher Liew, CFA

While rising debt continues to threaten Canada’s banking sector, the Toronto Dominion Bank stock and Scotiabank stock are still reliable…

Read more »

Glass piggy bank
Dividend Stocks

3 Reasons Why Scotiabank (TSX:BNS) Is the Best Big Bank to Buy in 2020

| Adam Othman

Find out why Bank of Nova Scotia stock is a must-have for your investment portfolio as you enter the New…

Read more »

Arrow descending on a graph
Dividend Stocks

WARNING: A Housing Market Crash Could Tank These 3 Canadian Stocks!

| Andrew Button

If you're worried about a potential housing market crash, you'd be wise to avoid Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM)…

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

TFSA Investors: Should You Buy TD Bank (TSX:TD) Stock Today?

| Andrew Walker

The TFSA is a great tool for Canadian investors to build a retirement funds and an income portfolios.

Read more »

Businessman looking at a red arrow crashing through the floor
Dividend Stocks

The $100 Billion Time Bomb That Could Sink Canadian Bank Stocks!

| Andrew Button

Faced with rising consumer debt and declining credit quality, banks like Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) are in a…

Read more »

Financial technology concept.
Dividend Stocks

TFSA Income Investors: 2 Reliable Dividend Stocks to Own for 30 Years

| Andrew Walker

Income investors want to own stocks that won't keep them up at night.

Read more »

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

Canada Revenue Agency: Avoid the 15% OAS Clawback With This Simple Trick

| Christopher Liew, CFA

The OAS clawback is a nagging issue. The effective solution to avoid it is by earning tax-free income from the…

Read more »

edit Woman calculating figures next to a laptop
Dividend Stocks

RRSP Wealth: 2 Cheap Stocks to Own for 25 Years

| Andrew Walker

Deals are still available for self-directed RRSP investors.

Read more »

hand using ATM
Dividend Stocks

Why the Canadian Imperial Bank of Canada (TSX:CM) Stock Price Fell 6.4% in December

| Karen Thomas, MSc, CFA

Canadian Imperial Bank of Commerce (TSX:CM) (NYSE:CM) falls in December as fourth quarter results disappoint amidst a weakening Canadian banking…

Read more »

Canadian Dollars
Dividend Stocks

1 High-Yield Dividend Stock Has Everything You Need to Get Rich

| Christopher Liew, CFA

Canadian Imperial Bank of Commerce stock pays the highest dividend among the Big Five Bank stocks. You can get rich…

Read more »

woman data analyze
Dividend Stocks

Revealed: I Just Bought This Stock for My RRSP

| Nelson Smith

You won't find many financial institutions finer than TD Bank (TSX:TD)(NYSE:TD). That's why this stud bank has found a home…

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

Why Now Is the Time to Get Greedy With the Canadian Banks

| Joey Frenette

Why Scotiabank (TSX:BNS)(NYSE:BNS) could be your ticket to financial freedom amid unfavourable macro conditions.

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Dividend Stocks

Retirees: How to Generate an Extra $735 in Monthly Income and Protect Your OAS Pension

| Andrew Walker

Here's how Canadian pensioners can boost income without triggering OAS clawbacks.

Read more »

edit Woman calculating figures next to a laptop
Dividend Stocks

Forget Gold! Buy This 5%-Yield Dividend Stock Instead

| Kay Ng

Don’t be tricked by the short-term spike in gold prices. Buy Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) stock instead.

Read more »

Bank sign on traditional europe building facade
Dividend Stocks

3 Canadian Bank Stocks to Watch in 2020

| Andrew Button

After having one of its biggest subsidiaries bought out, the Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is one to keep an eye on…

Read more »

Happy retirement
Dividend Stocks

Forget Lotto Max: Here’s How to Retire a Millionaire

| Andrew Walker

This investment strategy offers better odds of retiring rich.

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.