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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

Bank Stocks

Young Investors: Should Bank of Montreal (TSX:BMO) Stock Be in Your RRSP?

| Andrew Walker

Dividend stocks have long-been popular picks for buy-and-hold RRSP investors.

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Dividend Stocks

Canada Stock Market up on Solid Bank Revenue Growth

| Debra Ray

Stock market investors may want to buy bank stocks in Canada on the Toronto Stock Exchange after positive Bank of…

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Dividend Stocks

TFSA Investors: 2 Dividend Beasts to Buy in December

| Ambrose O'Callaghan

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and BCE Inc. (TSX:BCE)(NYSE:BCE) are two dividend stocks worth counting on before 2020.

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Dividend Stocks

1 Costly Mistake Could Ruin Your Careful Retirement Planning

| Christopher Liew, CFA

Many Canadians ruin their own retirement because of one grievous error. However, investing in CIBC stock is one of their…

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Dividend Stocks

One Top Dividend Stock to Buy for Your TFSA in 2020

| Haris Anwar

Buying Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) stock now could strengthen your TFSA portfolio in 2020.

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Dividend Stocks

Scared of Losing Money Investing? 3 Ways to Soothe Your Fears

| Christopher Liew, CFA

Don't want to lose money investing? Look long term and invest in companies like Suncor stock and TD stock.

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Dividend Stocks

Tax-Free Income: 2 High-Yield Stocks for TFSA Investors

| Andrew Walker

Here's how retirees can generate passive income that won't be taxed by the Canada Revenue Agency.

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Dividend Stocks

3 Dividend Stocks That Are on Sale for Massive 2020 Upside!

| Kay Ng

Here are three bargain dividend stocks across three sectors for your choosing! Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Canadian Tire…

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Bank Stocks

Value Investors: 2 Dirt-Cheap Dividend Stocks to Buy Before 2020

| Mat Litalien, MBA

Stocks such as Equitable Group (TSX:EQB) are trading at some of the lowest price-to-earnings-to-growth (PEG) ratios on the TSX Index.

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Dividend Stocks

Get Rich Slowly With These 3 Boring TSX Stocks

| Andrew Button

If you're looking for slow but certain asset appreciation, consider Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock.

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Dividend Stocks

3 “Forever” Assets That Will Provide a Lifetime of Dividends

| Christopher Liew, CFA

BCE stock, Canadian Utilities stock, and BMO stock are for investors looking for a lifetime of dividends. These companies can…

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Bank Stocks

TFSA Strategy: How Retired Canadian Couples Can Earn an Extra $5,400 Tax-Free

| Andrew Walker

Here's how to keep more of your investment income out of the hands of the CRA.

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Dividend Stocks

1 RRSP Formula to Pay Fewer Taxes if You Make Over $100,000/Year

| Adam Othman

From contributing more money to your RRSP to investing in stocks like Bank of Montreal, here’s how you can maximize…

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Dividend Stocks

Forget Penny Stocks! These 2 High-Yield Dividend Stocks Are Better Buys

| Adam Othman

Growth investors should consider the likes of Telus and Bank of Nova Scotia stocks over penny stocks to earn a…

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Dividend Stocks

Self-Manage Your Retirement & Boost Your Retirement Income

| Debra Ray

Supplement your low yield Canadian Pension Plan (CPP) income with Royal Bank of Canada (TSX:RY)(NYSE:RY) stock in a self-managed Tax-Free…

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Dividend Stocks

3 High-Yield Dividend Growth Stocks to Buy in 2020

| Andrew Button

If you're looking for high yield dividend growth stocks to buy in 2020, consider Telus Corp (TSX:T)(NYSE:TU)

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Dividend Stocks

Long-Term Investors: This Fintech Is 1 of the Top Stocks to Buy in December

| Daniel Da Costa

The banking industry has always been lucrative, and now with digital banking driving new opportunities, companies like VersaBank (TSX:VB) are…

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Dividend Stocks

Retiring Investors: 1 Great Reason to Add This Bank Stock to Your RRSP

| Victoria Hetherington

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) has been in the headlines this week. Here’s why it’s a good buy for retirement wealth creation.

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Dividend Stocks

2 Opposite Ways to Make $1,000/Month Passive Income in Your TFSA

| Adam Othman

Shopify stock and Royal Bank of Stock both have the potential to help you generate a $1,000 per month income,…

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Dividend Stocks

Alert: TD Bank (TSX:TD) Could Be Ready to Break Out!

| Joey Frenette

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) looks dirt-cheap and could be on the cusp of making a big upward move.

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Dividend Stocks

TFSA Pension: 2 Top Dividend Stocks for Reliable Tax-Free Income

| Andrew Walker

Canadian retirees want to get better returns out of their hard-earned savings.

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Dividend Stocks

Passive Investors: Watch These 3 Trends in 2020

| Victoria Hetherington

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) was one of the biggest stocks to make headlines this week. Here’s what else investors need to…

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Dividend Stocks

1 Bank Stock Is All You’ll Ever Need to Get Wealthy

| Christopher Liew, CFA

The TD stock is what you need for long-term financial security. No bank is as impregnable as Toronto Dominion whether…

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Dividend Stocks

Has Bank of Nova Scotia (TSX:BNS) Hit a Snag in Latin America?

| Matt Smith

There are signs that the growing unrest in South America could impact Bank of Nova Scotia's (TSX:BNS)(NYSE:BNS) financial performance.

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Dividend Stocks

Ready to Retire? If You Can’t Answer These 3 Questions, You Aren’t

| Christopher Liew, CFA

Retirement planning is a tedious undertaking. Your plan should be foolproof and include the financial support from dividend payers like…

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Dividend Stocks

TFSA 2020 Contribution Limit: How to Turn $6,000 Into $64,000

| Andrew Walker

The TFSA contribution limit will increase by $6,000 in 2020. How should you invest the funds?

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Dividend Stocks

Earnings Season Is Back and This Bank Is Loving it!

| Demetris Afxentiou

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) kicked off earnings season this week by posting results for the fourth fiscal quarter.

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Dividend Stocks

There’s a New Reason to Buy This 3.8%-Yielding Bank Stock

| Victoria Hetherington

A strong TFSA addition, Toronto-Dominion Bank (TSX:TD)(NYSE:TD), is also fast becoming the most strategically important of the Big Five.

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Dividend Stocks

Retirees: Here’s 1 Awesome Trick to Max Out Your CPP Pension

| Christopher Liew, CFA

The best way to get the most out of your CPP is to time the withdrawal perfectly. If you have…

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Dividend Stocks

Yield Seekers: 2 High-Yield Dividend Stocks for Your TFSA

| Adam Othman

There are few better ways to use your idle cash than to invest in high-yield stocks like Telus and CIBC…

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Bank Stocks

M&A Alert: Three Big Deals Make Waves

| Mat Litalien, MBA

Toronto-Dominion Bank (USA)(TSX:TD) stock reacted favourably to its deal while another was not so lucky.

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Dividend Stocks

Canada Revenue Agency: The Best Dividend Stocks for Your TFSA

| Kay Ng

Enjoy tax-free income from the best dividend stocks available for purchase today, including Bank of Nova Scotia (TSX:BNS)(NYSE:BNS)!

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Dividend Stocks

Will the TD Ameritrade Buyout Send TD Bank (TSX:TD) Stock Higher?

| Andrew Button

With TD Bank's (TSX:TD)(NYSE:TD) biggest subsidiary about to be bought out, is its stock a buy?

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Bank Stocks

TFSA Wealth: Is This a Good Time to Buy Bank of Nova Scotia (TSX:BNS) Stock?

| Andrew Walker

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is an interesting stock for buy-and-hold investors. Here's why.

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Dividend Stocks

Canada Revenue Agency: Hate Taxes? Then Avoid These 2 Glaring TFSA Mistakes

| Christopher Liew, CFA

Negligence in managing the TFSA could result to payment of penalty taxes. Your overall returns from the dividend payouts of…

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Dividend Stocks

Did the Bank of Nova Scotia (TSX:BNS) Warn Us About a Recession?

| Mat Litalien, MBA

On Tuesday, the Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) released mixed fourth quarter results.

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Dividend Stocks

Worried About Your Retirement? Here’s How to Add an Extra $5,000/Year in Tax-Free Dividend Income

| David Jagielski

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is a great stock for investors who are looking to add some extra dividend income…

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Dividend Stocks

Canadians: Build a Backup Pension the Professional Way

| Adam Othman

Suncor Energy and Royal Bank of Canada are ideal stocks to consider if you are seeking a comfortable retirement plan…

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Dividend Stocks

TFSA Pension: How Families Can Build a $1 Million Retirement Fund in the Gig Economy

| Andrew Walker

Here's how owning dividend stocks such as Royal Bank of Canada (TSX:RY)(NYSE:RY) can help you build a substantial self-directed pension.

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Dividend Stocks

Why Bank Stocks Should Be a Key Component of Dividend Portfolios

| Kay Ng

Investors should just keep big Canadian banks like Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) in their portfolios for income and long-term…

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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.