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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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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

Dividend Stocks

TFSA Investors: TD Bank (TSX:TD) vs. Royal Bank (TSX:RY) Showdown!

| Joey Frenette

The outlook for the Canadian banks, Royal Bank of Canada (TSX:RY)(NYSE:RY) and TD Bank (TSX:TD)(NYSE:TD) included, remains bleak, but which…

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Bank Stocks

Bank Stocks: Is This 1 Stock a Buy?

| Chen Liu

Bank of Nova Scotia is trading slightly above intrinsic value. I would avoid the stock in your TFSA and RRSP…

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Dividend Stocks

TFSA Investor: 2 Top Canadian Dividend Stocks to Own for 40 Years

| Andrew Walker

The TFSA is a great option for building a self-directed pension fund.

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Dividend Stocks

CRA Pension Tax: How to Boost Retirement Income and Avoid OAS Clawbacks

| Andrew Walker

Canadian retirees can generate significant income on their savings without being hit with OAS clawbacks. Here's how it works.

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Dividend Stocks

Canada Revenue Agency: 2 Smart Ways to Get the Most From Your RRSP

| Christopher Liew, CFA

Early contribution to the RRSP and investments in dividend payers like the Canadian Imperial Bank of Commerce stock and National…

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Dividend Stocks

TFSA Investor: 2 Reasons Why Sitting on Cash Could Cost You Dearly

| Christopher Liew, CFA

Sitting on cash is the not the best way to use the TFSA. You can realize compound growth of money…

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Dividend Stocks

Millennials: Retire in 15 Years (or Less!) With This Easy 3-Step Guide

| Nelson Smith

Cheap living, maximizing your income, and investing in great stocks like Royal Bank of Canada (TSX:RY)(NYSE:RY) will make your early…

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Bank Stocks

TFSA Investors: 1 Canadian Stock I Would Avoid in a Recession

| Aditya Raghunath

goeasy stock has outperformed markets in the last decade. Here's why you need to sell your position in the company…

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Dividend Stocks

Retirees: Avoid the 15% OAS Clawback in 2020 With These 2 Tricks

| Christopher Liew, CFA

The way to counter the 15% OAS clawback is to defer receiving it and invest in dependable dividend payers like…

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Bank Stocks

TFSA Investors: Avoid This Top 3 Bank!

| Chen Liu

Toronto-Dominion Bank is trading above intrinsic value. I would avoid the stock in your TFSA.

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Dividend Stocks

Retired and Scared of a Market Crash? Here Are 2 Things to Do and 2 Things to Avoid

| Christopher Liew, CFA

The last thing retirees need during a market crash is mental stress and financial dislocation. You can plan ahead by…

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Dividend Stocks

TD Bank (TSX:TD): 1 of the Best Bank Stocks to Own for the Next 100 Years

| Kay Ng

Buy TD (TSX:TD)(NYSE:TD) stock now while it’s a good value and before it increases its dividend next month.

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Dividend Stocks

Canada Revenue Agency: Combat Higher CPP Pension Contributions With Dividend Stocks

| Kay Ng

Shrug off higher CPP contributions with dividend stocks like Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and A&W Revenue Royalties Income Fund (TSX:AW.UN).

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Dividend Stocks

CAUTION: Is it Too Soon to Buy CIBC (TSX:CM) Stock?

| Joey Frenette

CIBC (TSX:CM)(NYSE:CM) stock is dirt cheap, but is it a bargain buy amid a nasty industry-wide downturn?

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Dividend Stocks

How Many Stocks Should Investors Hold Inside a TFSA?

| David Jagielski

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is a stock that can be an ideal fit for many different types of portfolios.

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Bank Stocks

Royal Bank (TSX:RY): Does Big Equal Best?

| Chen Liu

Royal Bank of Canada is trading slightly above intrinsic value. I would avoid the stock in your RRSP or TFSA…

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Dividend Stocks

Why CIBC Could Be One of Canada’s Top Banking Stocks to Buy for 2020

| Mat Litalien, MBA

Canada's worst performing bank is also Canada's cheapest. Canadian Imperial Bank of Commerce (USA)(TSX:CM) Stock is positioned for a strong…

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Dividend Stocks

Don’t Just Buy CIBC (TSX:CM) Stock for its 5.3% Yield

| Victoria Hetherington

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is a key stock for investors seeking a rich yield, but there are more…

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Bank Stocks

Canadians: 1 Bank Stock That Will Supercharge Your TFSA

| Ambrose O'Callaghan

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) stock offers top-end income that can fuel tax-free dividends in a TFSA.

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Dividend Stocks

Retirees: Supplement Your Pension With These 2 Stocks!

| Chris MacDonald

For retirees looking to supplement their pension income, consider investing in companies like Chorus Aviation Inc. (TSX:CHR.B) and Bank of…

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Bank Stocks

RRSP Deadline: 2 Top Canadian Stocks to Help You Retire Wealthy

| Andrew Walker

Owning top-quality dividend stocks is a proven strategy for building retirement wealth.

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Dividend Stocks

Investors: 3 Great Stocks To Buy With Your $6,000 TFSA Contribution

| Nelson Smith

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), Telus (TSX:T)(NYSE:TU) and Intact Financial (TSX:IFC) would all look great in any TFSA.

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Dividend Stocks

Is a $1,000,000 TFSA a Realistic Goal?

| David Jagielski

Royal Bank of Canada (TSX:RY)(NYSE:RY) is a solid dividend stock that you can build your portfolio around.

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Dividend Stocks

Why Scotiabank (TSX:BNS) Is a #1 Choice for Retirees

| Jason Hoang

Thanks to its decent yield and strong growth potential, ScotiaBank stock may just be a perfect buy for retirees to…

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Dividend Stocks

5 Canadian Dividend Stocks to Build Wealth in 2020

| Andrew Button

If you're looking to build wealth in 2020, consider high-yield dividend stocks like Enbridge Inc (TSX:ENB)

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Dividend Stocks

3 Stocks Yielding up to 7.25% to Buy in 2020

| Mat Litalien, MBA

Canadian Dividend Aristocrats such as Enbridge Inc (TSX:ENB)(NYSE:ENB) offer a safe and attractive starting yield.

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Dividend Stocks

Canada Revenue Agency: Here’s What You Should Do With Your TFSA Contributions

| Stephanie Bedard-Chateauneuf, MBA

Buying quality stocks like National Bank of Canada (TSX:NA) is an excellent choice of investment for a TFSA.

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Dividend Stocks

TFSA or RRSP: Which One Suits You Best in 2020?

| Christopher Liew, CFA

The choice of the TFSA or RRSP as an investment account depends on one’s financial goal. But you can place…

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Dividend Stocks

Income Investors: 2 Great Canadian Dividend Stocks for a TFSA Portfolio

| Andrew Walker

It's still possible to get a 5% dividend yield from top Canadian companies.

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Dividend Stocks

2 Stocks With Insane Dividend Growth

| Joey Frenette

Royal Bank of Canada (TSX:RY)(NYSE:RY) and another dividend grower that'll crush the markets over the next decade and beyond.

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Dividend Stocks

Couples in Your 20s: It Won’t Be Easy but You Can Retire in Your 40s

| Adam Othman

As a couple, you can earn the right to spend the latter half of your life without worrying about work.…

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Dividend Stocks

Forget Bank Stocks: These 2 Finance Companies Will Make You Rich

| Daniel Da Costa

Bank stocks have a number of headwinds they are facing over the short term, so consider adding a stock like…

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Dividend Stocks

A Recession Is Unlikely in 2020

| Matt Smith

Buy Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) today and lock in a 5% dividend yield.

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Dividend Stocks

Royal Bank of Canada (TSX:RY): The Only Bank to Own in 2020

| Matt Smith

Royal Bank of Canada (TSX:RY)(NYSE:RY) is poised to soar in 2020.

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Dividend Stocks

4 Top Canadian Stocks to Buy for a Bear Market

| Victoria Hetherington

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and these three other top TSX stocks could defy a downturn.

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Bank Stocks

TFSA Wealth: 2 Canadian Stocks for a Self-Directed Pension Fund

| Andrew Walker

Here's why the TFSA is a great tool to save for retirement.

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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.

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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…

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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…

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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).

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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.