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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

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?

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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.…

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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…

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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…

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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.

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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…

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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.

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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.

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Recent Bank Stocks News

Bank Stocks

Is RBC (TSX:RY) the Best Blue-Chip Stock for Your Investing Portfolio?

| Jason Sparling

Coming off a strong year in 2019, RBC is one of the most stable and secure investments in Canada. With…

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Dividend Stocks

RRSP Beginners: 2 Top Canadian Dividend Stocks to Start a Wealth Fund in 2020

| Andrew Walker

Reliable dividend stocks are popular picks to launch a diversified RRSP portfolio.

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Dividend Stocks

Turning 60 Soon? You Might Want to Delay Your CPP Pension Until 70

| Christopher Liew, CFA

You can consider delaying the CPP pension until 70 and get a big financial advantage if you don’t have health…

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Dividend Stocks

3 Top Dividend Stocks to Buy and Hold Forever

| Kay Ng

Here are the key things to look for in buy-and-hold dividend stocks like Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock.

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Dividend Stocks

Planning for Retirement? Don’t Make the Mistake 59% of Canadians Are Already Making!

| David Jagielski

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock can be a great way to grow your savings and make your retirement less stressful.

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Dividend Stocks

TFSA Investors: 3 Top TSX Stocks About to Report Earnings

| Daniel Da Costa

Three of the best Canadian stocks are reporting earnings this week, which could potentially impact the TSX, depending on how…

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Dividend Stocks

TFSA Investors: Pay $0 Taxes on Investment Gains in 2020

| Christopher Liew, CFA

The new TFSA contribution limit in 2020 is $6,000. Investors can once more realize a tax-free financial bonanza from generous…

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Dividend Stocks

Retirees: 1 Trick to Max Out Your CPP Pension

| Aditya Raghunath

The CPP payout will be insufficient for most retirees. You can look to buy stocks such as the Royal Bank…

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Dividend Stocks

TFSA Investors: 3 Canadian Dividend Stocks to Buy and Hold Forever

| Stephanie Bedard-Chateauneuf, MBA

BCE Inc. (TSX:BCE)(NYSE:BCE) is one of Canadian dividend stock that pays a safe and reliable dividend.

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Dividend Stocks

A Top Dividend Stock to Buy Right Now

| Haris Anwar

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM), a top dividend stock, is looking more attractive with a yield of more than…

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Bank Stocks

TFSA Pension: 2 Top TSX Index Stocks to Buy on a Market Pullback

| Andrew Walker

History suggest these TSX Index leaders are strong buys on a market correction.

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Dividend Stocks

CPP Pension User: 65 Could Be the Perfect Age for You to Take Your CPP Pension

| Christopher Liew, CFA

The TFSA and RRSP should work in your favor when planning for retirement. Coupled with investment income from the BNS…

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Bank Stocks

TFSA Investors: Why You Should Buy Insurers Over Bank Stocks

| Stephanie Bedard-Chateauneuf, MBA

Life insurance stocks like Manulife Financial Corp. (TSX:MFC)(NYSE:MFC) have outperformed bank stocks in 2019, and this trend should continue in…

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Dividend Stocks

Royal Bank of Canada (TSX:RY) vs. TD Bank (TSX:TD): Which Stock Is Better?

| Andrew Button

Royal Bank of Canada (TSX:RY)(NYSE:RY) and The Toronto-Dominion Bank (TSX:TD)(NYSE:TD) are two bank stocks worth comparing

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Dividend Stocks

How a TD (TSX:TD) Mortgage Rate Cut Could Ignite a Housing Boom in 2020

| Adam Othman

Toronto Dominion made the first move among the big six and lowered its five-year fixed mortgage rates. If other banks…

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Dividend Stocks

TD Bank (TSX:TD) Stock Looks Like Canada’s Cheapest Bank

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) may not be the cheapest bank according to traditional valuation metrics, but it sure is when you…

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Dividend Stocks

TFSA Investors: 3 Top Value Stocks to Buy Right Now!

| Andrew Button

Bank stocks like Toronto-Dominion Bank (TSX:TD)(NYSE:TD) are looking mighty cheap right now

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Dividend Stocks

Stocks vs. Mutual Funds: Which 1 Should You Choose for the 2020 RRSP Deadline?

| Adam Othman

A stock like the National Bank of Canada shows why stocks are better than mutual funds for your RRSP ahead…

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Dividend Stocks

Is Royal Bank’s Stock a Buy Before Earnings?

| Mat Litalien, MBA

Royal Bank of Canada (USA)(TSX:RY) is expected to announce a dividend raise along with first quarter earnings on Friday.

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Dividend Stocks

3 of the Best Canadian Stocks to Hold in a 2020 Recession

| Victoria Hetherington

With so much uncertainty in the markets, Canadians should be buying stocks like Newmont Corp. (TSX:NGT)(NYSE:NEM).

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Dividend Stocks

Dividend Investors: Should You Buy CIBC (TSX:CM) or BCE (TSX:BCE) Stock?

| Andrew Walker

CIBC (TSX:CM)(NYSE:CM) and BCE (TSX:BCE)(NYSE:BCE) offer dividend yields above 5%. Is one a better bet right now?

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Dividend Stocks

Toronto-Dominion Bank (TSX:TD): The Only Big Bank to Own in 2020

| Matt Smith

Buy Toronto-Dominion Bank (TSX:TD)(NYSE:TD) today and lock-in a 4% yield.

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Dividend Stocks

CPP Pensioners: 3 Stress-Free Stocks to Help You Retire in Comfort

| Andrew Button

If you're looking for extra income to supplement CPP, consider Fortis Inc (TSX:FTS)(NYSE:FTS) stock

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Dividend Stocks

No Savings? No Problem: Follow These 3 Steps to Build Cash Quickly

| Christopher Liew, CFA

Without savings, life can be stressful. But starting from scratch to build cash quickly is not impossible if you only…

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Dividend Stocks

TFSA Investors: Diversify Your TFSA Portfolio With These 3 Top Stocks

| Stephanie Bedard-Chateauneuf, MBA

Diversifying your TFSA portfolio with strong stocks like National Bank of Canada (TSX:NA) is important to lower its overall risk.

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Dividend Stocks

CPP Pension User: 3 Easy Tips to Reduce or Even Eliminate OAS Clawback

| Kay Ng

You deserve your OAS pension when the time comes. Here's how you can make sure you can get the full…

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Dividend Stocks

RRSP Deadline 2020: 2 Strategies You Can Use When Investing

| Jason Hoang

The RRSP contribution deadline for the 2019 tax year is just around the corner. Here are two practical strategies to…

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Dividend Stocks

$5,000 in This Dividend Stock Will Earn You $65 Every 3 Months

| Adam Othman

The stock of Canadian Imperial Bank of Commerce can fetch shareholders reasonable income through dividends to grow their wealth in…

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Dividend Stocks

3 Scary Outcomes of Not Saving Enough Money

| Christopher Liew, CFA

You lose the opportunity to build a substantial nest egg by not saving enough money. With the Toronto Dominion stock…

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Dividend Stocks

Don’t Just Rely Solely on Your CPP and OAS Pension When You Retire: Invest!

| Christopher Liew, CFA

The CPP and OAS are foundations for retirees and not replacement income. Investing in dividend payers like the Laurentian Bank…

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Energy Stocks

Why the TSX Could Beat the S&P 500 in the Next Decade

| Stephanie Bedard-Chateauneuf, MBA

The S&P 500 had a much better return than the TSX in the 2010s, but this could change in the…

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Dividend Stocks

Canadians: Buy 1 Top TFSA Stock for “Forever Dividends”

| Victoria Hetherington

Canadian Tire Corporation Ltd. (TSX:CTC.A) is a surprisingly diversified stock which also offers access to one of the Big Five…

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Dividend Stocks

Last-Minute RRSP Contributions: 2 Cheap Dividend Stocks With Safe and Over 4% Yields

| Kay Ng

Get safe but juicy dividend income from Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and another quality but cheap stock now!

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Dividend Stocks

Manulife (TSX:MFC) Stock Delivers Double-Digit Dividend Growth

| Mat Litalien, MBA

Manulife Financial (TSX:MFC) stock is a rare triple-threat. At the current price, it offers growth and income at excellent value.

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Bank Stocks

Millennials: Here Are 3 Reasons Why You Will Stay Broke in 2020

| Jason Hoang

Bad money management habits will continue to keep millennials broke. Royal Bank of Canada stock is an investment prospect that…

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Dividend Stocks

Diversify Your Way to Wealth With These 3 Stocks

| Adam Othman

Toronto Dominion stock, Heroux Devtek stock, and Intact Financial stock allow for a good diversification analysis.

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Dividend Stocks

OAS and CPP Pensions Not Enough: 3 Dividend Stocks for TFSA Income

| Andrew Walker

Top high-yield dividend stocks and REITs held inside a TFSA can help retirees earn tax-free income.

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Bank Stocks

Is TSX:BMO or TSX:TD the Best Canadian Bank Stock to Invest in Today?

| Nicholas Dobroruka

Thinking of adding a bank stock to your portfolio? Find out whether BMO (TSX:BMO)(NYSE:BMO) or TD (TSX:TD)(NYSE:TD) is the right…

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Dividend Stocks

CPP Pension User: Bankroll Your Retirement With 2 High-Yield Dividend Stocks

| Christopher Liew, CFA

Would-be retirees can be self-sufficient if there are other sources of income on top of pension plans. By owning high-yield…

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Dividend Stocks

Why TD Stock Is a Hot Buy for 2020 and Beyond

| David Jagielski

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock could be one of the better buys on the TSX this year.

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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.