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. 

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?

Read more »

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 »

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 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 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 »

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 »

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

Dividend Stocks

TFSA Investors: Be Careful Not to Make This 1 Costly Mistake!

| David Jagielski

If you're a risk-averse investor, Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) could be an ideal stock to invest in.

Read more »

Dividend Stocks

2 Classic Canadian Dividend Stocks for Buy-and-Hold Investors

| Victoria Hetherington

Bank of Montreal (TSX:BMO)(NYSE:BMO) and one other market leader are strong long-term plays for pasive income.

Read more »

Bank Stocks

TD Bank (TSX:TD) vs. RBC (TSX:RY): The Best Bank Stock for 2020

| Vishesh Raisinghani

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stands out as the winner in terms of diversification and valuation.

Read more »

Bank Stocks

2 Super-Cheap Bank Stocks to Buy Today

| Ambrose O'Callaghan

Canadian Western Bank (TSX:CWB) and Laurentian Bank of Canada (TSX:LB) fell into oversold territory after earnings.

Read more »

Dividend Stocks

3 Stock Investing Tips That Could Make You a Millionaire

| Haris Anwar

Investing in stocks, such as Toronto-Dominion Bank (TSX:TD)(NYSE:TD), could help achieve your financial goals. Here are my three tips.

Read more »

Dividend Stocks

The Year’s Worst-Performing Stocks

| Mat Litalien, MBA

CannTrust Holdings (USA)(TSX:TRST) is among the year's worst-performing stocks. Are any of these laggards a buy for 2020?

Read more »

Dividend Stocks

Canada Revenue Agency: The CRA Can Tax Your OAS Payments by 15%

| Christopher Liew, CFA

OAS payments are not tax exempt. The dividends from CIBC stock and BCE stock can be your counter-balance against the…

Read more »

Dividend Stocks

Do You Really Need $750,000 to Retire?

| Christopher Liew, CFA

If Canadians really believe that you only need three-quarters of a million dollars to retire, you can invest in Laurentian…

Read more »

Dividend Stocks

2 Oversold Bank Stocks That Are Hot Buys Right Now!

| David Jagielski

The further Toronto-Dominion Bank (TSX:TD)(NYSE:TD) falls, the better of a buy that it becomes.

Read more »

Bank Stocks

SURPRISE: This Is the Top Canadian Bank Stock in 2019

| Ambrose O'Callaghan

National Bank of Canada (TSX:NA) has been the top bank stock in 2019, and it looks strong heading into the…

Read more »

Bank Stocks

RRSP Investors: Is Bank of Nova Scotia (TSX:BNS) Stock a Buy Right Now?

| Andrew Walker

Bank stocks are popular RRSP picks. Should that continue to be the case?

Read more »

Dividend Stocks

Canada Revenue Agency: 1 RRSP Mistake Will Leave You With a Huge Tax Bill

| Adam Othman

As amazing as your RRSP can be for your retirement, there is one crucial mistake Canadians should avoid and invest…

Read more »

Dividend Stocks

How My Top Stocks to Buy Have Performed in 2019

| Stephanie Bedard-Chateauneuf, MBA

A performance review of my monthly top stocks for 2019, which includes Dollamara (TSX:DOL) and goeasy (TSX:GSY).

Read more »

Tech Stocks

The Year’s Best-Performing Stocks

| Mat Litalien, MBA

Shopify (TSX:SHOP)(NYSE:SHOP) is once again among the best-performing stocks of the year. Can they outperform again in 2020?

Read more »

Dividend Stocks

These 3 Dividend Kings Haven’t Missed a Payout in 100 Years

| Nelson Smith

Great stocks like Imperial Oil (TSX:IMO)(NYSE:IMO), BCE (TSX:BCE)(NYSE:BCE), and CIBC (TSX:CM)(NYSE:CM) have each been rewarding investors for at least a…

Read more »

Dividend Stocks

Canadian Imperial Bank of Commerce (TSX:CM) Disappoints Again… Time to Sell?

| Joey Frenette

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) fell short of expectations, with surging provisions. As the stock continues to tread water,…

Read more »

Dividend Stocks

Canada Revenue Agency: You Can’t Avoid Death, but You Can Avoid TFSA Taxes

| Christopher Liew, CFA

Death is inevitable, but paying taxes to the CRA is avoidable for TFSA users. All earnings from Bank of Montreal…

Read more »

Dividend Stocks

Canada’s Bank Stocks Are Oversold: Time to Buy?

| Mat Litalien, MBA

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Royal Bank of Canada (TSX:RY)(NYSE:RY) stock have both entered oversold territory for only the second time…

Read more »

Dividend Stocks

Buy TD Bank (TSX:TD) Today Because It Won’t Stay This Cheap Forever!

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) is trading at a discount, but don't expect it to last through 2020!

Read more »

Dividend Stocks

Retirees: 3 Simple Ways to Protect Your CPP Pension From the Next Market Crash

| Kay Ng

Worried about a market crash, as we're living in one of the longest bull markets in history? You need not…

Read more »

Dividend Stocks

Pension Investors: 2 Steady Dividend Stocks for TFSA Income

| Andrew Walker

Reliable dividend stocks can help retirees meet their income needs.

Read more »

Energy Stocks

3 Stocks That Will Pay You More Dividends Than RBC (TSX:RY)

| Adam Othman

TC Energy stock, Emera stock, and Exchange Income stock are three Dividend Aristocrats with yields more attractive than Royal Bank…

Read more »

close-up photo of investor Warren Buffett
Bank Stocks

Warren Buffett Exited This Canadian Growth Stock in 2018

| Aditya Raghunath

Home Capital Group stock has gained over 100% since Warren Buffett exited the stock. Despite its attractive valuation, investors can…

Read more »

Bank Stocks

TFSA Pension: 2 Top Canadian Dividend Stocks to Help Couples Earn $434 in Monthly Tax-Free Income

| Andrew Walker

Here's how retirees can put more money in their pockets.

Read more »

Dividend Stocks

Alert: This Canadian Bank Killed It in 2019!

| Joey Frenette

National Bank of Canada (TSX:NA) is a king among men in the fourth quarter. Here's why investors should take notice.

Read more »

Dividend Stocks

2 Dividend Stocks Will Cut You a Fat Cheque Every 3 Months

| Christopher Liew, CFA

CIBC stock and First National stock can provide a significant boost to your earnings. You can incorporate the quarterly dividend…

Read more »

Dividend Stocks

If You Don’t Buy Royal Bank (TSX:RY) Shares Today, You’ll Be Kicking Yourself Later

| Nelson Smith

Royal Bank of Canada (TSX:RY)(NYSE:RY) is poised to be a stellar investment for decades to come. So, why don't you…

Read more »

Dividend Stocks

Retirees: How to Use Options to Supercharge Your Passive Income

| Joey Frenette

Why the BMO Covered Call Canadian Banks ETF (TSX:ZWB) can help retirees boost their income through the sale of call…

Read more »

Bank Stocks

Is goeasy (TSX:GSY) a Good Pick for 2020?

| Aditya Raghunath

goeasy stock has gained over 80% in 2019. Is it still attractive for 2020?

Read more »

Dividend Stocks

Baby Boomers: Thinking of Selling Your House? Read This First

| Christopher Liew, CFA

Selling your house to finance retirement is a hard and emotional decision. But if it’s the last resort, invest available…

Read more »

Dividend Stocks

Master Your TFSA With These 2 Pro Tips

| Adam Othman

From understanding the impact of losses on your contribution to the importance of owing stocks like Toronto Dominion, here’s how…

Read more »

Dividend Stocks

TFSA Investors: 3 Great Dividend Stocks Yielding up to 8.8%

| Mat Litalien, MBA

Stocks such as Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) offer sustainable yields that provide investors with above-average income.

Read more »

Bank Stocks

ALERT! 2 Top Bank Stocks Just Set Off a Buy Signal

| Ambrose O'Callaghan

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Royal Bank of Canada (TSX:RY)(NYSE:RY) stocks look oversold right now.

Read more »

Dividend Stocks

TFSA Investor Alert: How to Turn $20,000 Into $250,000 in 20 Years

| Andrew Walker

Buy-and-hold investors can take advantage of a TFSA to build a substantial retirement fund.

Read more »

Dividend Stocks

Buy This Top Bank Stock on Weakness as Uncertainty Mounts

| Victoria Hetherington

For investors seeking quality dividend stocks, Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is a strong play on weakness.

Read more »

Tech Stocks

How to Transform $5,000 Into $30,000!

| Ryan Vanzo

If you want to turn $5,000 into $30,000, you need to understand the factors that cause money to compound. Only…

Read more »

Dividend Stocks

DANGER: This Mistake Could Get Your TFSA Taxed at 50%!

| Andrew Button

To avoid getting taxed for holding prohibited TFSA investments, hold stocks like Royal Bank of Canada (TSX:RY)(NYSE:RY) instead

Read more »

Dividend Stocks

TFSA Income: Should Bank of Montreal Stock (TSX:BMO) Be in Your Portfolio?

| Haris Anwar

Two factors that make Bank of Montreal (TSX:BMO)(NYSE:BMO) stock a good fit for your TFSA.

Read more »

Bank Stocks

RRSP Investors: Is TD (TSX:TD) Stock a Buy Today?

| Andrew Walker

The Canadian banks just turned in a mixed bag of earnings for fiscal Q4 2019. Time to buy or bail…

Read more »

Dividend Stocks

3 Amazing Value Stocks for 2020

| Brian Pacampara, CFA

This group of bargains, including Nutrien (TSX:NTR)(NYSE:NTR), can help build your wealth the prudent way.

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.