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

coins jump into piggy bank
Bank Stocks

Best Stock to Buy Right Now: BNS vs Canadian Imperial Bank of Commerce?

| Kay Ng

BNS is a reasonably-priced big dividend investment over the next three to five years, while CIBC would be an excellent…

Read more »

Start line on the highway
Dividend Stocks

TFSA Passive Income: 4 Stocks to Buy and Never Sell

| Amy Legate-Wolfe

Looking for stocks that create perfect passive income? This TFSA dream team is the perfect portfolio just waiting to happen.

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Bank Stocks

Is TD Bank Stock a Buy for its 5% Dividend Yield?

| Jitendra Parashar

Despite short-term challenges after its U.S. AML settlement, TD Bank’s 5% dividend yield, alongside these factors, make it an attractive…

Read more »

Person holding a smartphone with a stock chart on screen
Bank Stocks

Is Canadian Imperial Bank of Commerce a Buy for its 4.4% Dividend Yield?

| Chris MacDonald

Let's dive into whether Canadian Imperial Bank of Commerce (TSX:CM) stock is worth buying for its dividend yield alone.

Read more »

Asset Management
Bank Stocks

Where Will Brookfield Stock Be in 5 Years?

| Jitendra Parashar

Here are some fundamental factors that could play a key role in helping Brookfield stock continue to surge over the…

Read more »

Bank Stocks

The Best Banking Stock to Invest $1,000 in Right Now

| Adam Othman

It's difficult to objectively call a stock the best without one or a set of evaluation metrics. Limiting yourself to…

Read more »

Dividend Stocks

5% Dividend Yield: Why I Will Be Buying and Holding This TSX Stock for Decades!

| Adam Othman

Stability and a healthy return potential are among the hallmarks of the so-called “forever stocks.” But while many stocks promise…

Read more »

3 colorful arrows racing straight up on a black background.
Bank Stocks

Down 20% This Stock Is Primed to Soar in 2025 and Beyond

| Andrew Walker

An extended rally could be on the way if the economy avoids a recession.

Read more »

Bank Stocks

Is TD Bank Stock a Buy, Sell, or Hold for 2025?

| Andrew Walker

TD has underperformed some peers in 2024. Will 2025 be better?

Read more »

Bank Stocks

Is BNS Stock a Buy, Sell, or Hold for 2025?

| Andrew Walker

BNS stock is up in recent weeks. Are more gains on the way?

Read more »

worry concern
Bank Stocks

BMO Stock: Should Canadian Investors Buy Now or Wait?

| Andrew Walker

BMO picked up a nice tailwind in the past month. Are more gains on the way?

Read more »

Bank Stocks

Should You Buy CIBC Stock or BMO Stock Today?

| Amy Legate-Wolfe

Both CIBC stock and BMO stock look like solid investments, with ultra-high dividends. But which is the better bet?

Read more »

Hourglass projecting a dollar sign as shadow
Bank Stocks

3 Reasons to Buy TD Bank Stock Like There’s No Tomorrow

| Jitendra Parashar

These are my top three reasons why TD Bank stock could be a solid buy right now.

Read more »

Bank Stocks

This Undervalued TSX Bank Stock Is My Top Pick for Canadians Right Now

| Aditya Raghunath

EQB stock has delivered market-beating returns to shareholders in the past two decades and continues to trade at a cheap…

Read more »

happy woman throws cash
Stocks for Beginners

1 Stock That Has Created Millionaires and Will Continue to Make More

| Amy Legate-Wolfe

Canadian banks have made millionaires time and time again. Not in a few years, mind you. But by investing long…

Read more »

Investor reading the newspaper
Bank Stocks

1 Dividend Superstar I’d Buy Over TD Bank Stock

| Chris MacDonald

Investors searching for a top dividend superstar to buy in this current market certainly have a number of options to…

Read more »

Stocks for Beginners

How Much Cash Do You Need to Quit Work and Live Off Dividend Income?

| Amy Legate-Wolfe

While I can't simply hand over millions to retire today, I can certainly help set you up to retire early…

Read more »

concept of real estate evaluation
Bank Stocks

1 Dividend Superstar I’d Buy Over TD Bank Stock

| Christopher Liew, CFA

A high-yield, high-flying small-cap stock is a more profitable option today than a top Big Bank.

Read more »

Bank Stocks

2 Undervalued Canadian Bank Stocks to Buy Now

| Joey Frenette

Buy Bank of Nova Scotia (TSX:BNS) and another top bank stock before their rally takes them to new heights in…

Read more »

clock time
Bank Stocks

BMO Is Paying $6.20 Per Share in Dividends: Time to Buy This Top Stock?

| Amy Legate-Wolfe

BMO (TSX:BMO) stock offers up a strong dividend yield that recently saw a 4% increase. So, is it time to…

Read more »

Bank Stocks

Invest $7,000 in This Dividend Stock for $367 in Passive Income

| Kay Ng

Investors are encouraged to accumulate shares of solid dividend stocks like BMO stock on market pullbacks.

Read more »

Bank Stocks

TD Bank Stock: Buy, Sell, or Hold Right Now?

| Brian Paradza, CFA

Toronto-Dominion Bank (TSX:TD) stock is at a crossroads. Recent growth and steady dividends attract buyers to TD Bank stock, but…

Read more »

Bank Stocks

Scotiabank Stock on Sale: Why Now’s the Perfect Time to Invest

| Kay Ng

Scotiabank stock offers high income and the potential for strong returns in the coming years.

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Bank Stocks

1 Magnificent TSX Dividend Stock Down 10.3% to Buy and Hold Forever

| Brian Paradza, CFA

The Bank of Montreal (TSX:BMO) stock is undergoing a temporary weakness. Here's why you can buy it for its 5.3%…

Read more »

Dividend Stocks

RBC Stock’s Path to Doubling Your Investment: A Decade-Long Perspective

| Brian Paradza, CFA

The Royal Bank of Canada (TSX:RY) or RBC stock has more than doubled investors' capital in 10 years and may…

Read more »

Bank Stocks

Is TD Bank Stock a Buy in 2024?

| Karen Thomas, MSc, CFA

TD Bank stock is trading 22% lower than its 2022 highs -- is this a good time to buy or…

Read more »

data analyze research
Bank Stocks

Bank of Montreal vs. Royal Bank of Canada: Which Canadian Bank Stock Is the Better Buy?

| Andrew Walker

RY trades near a record high, while BMO is out of favour with investors.

Read more »

Stocks for Beginners

3 Things You Need to Know If You Buy Canadian Western Bank Today

| Amy Legate-Wolfe

Canadian Western Bank (TSX:CWB) recently received approval to be taken over by National Bank, so what should investors do now?

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Bank Stocks

1 Dividend Stock Down 5 Percent to Buy Right Now

| Demetris Afxentiou

Looking for a great discounted option to buy? Here's a dividend stock down 5% that holds plenty of long-term potential.

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Bank Stocks

The Average Canadian Stock Investor Owns This 1 Stock: Do You?

| Kay Ng

Canadian investors can buy shares of this one stock. Then, sit back and enjoy the nice dividend income while waiting…

Read more »

Technology
Bank Stocks

Where Will TD Bank Stock Be in 5 Years?

| Jitendra Parashar

Despite short-term challenges from investigations into its AML program, these factors could help TD Bank stock regain its upward momentum.

Read more »

data analyze research
Bank Stocks

Should You Buy Bank of Nova Scotia or Royal Bank Stock Today?

| Andrew Walker

These Canadian banks just reported fiscal Q3 2024 results.

Read more »

Bank Stocks

Buy, Sell, or Hold Bank of Nova Scotia Stock?

| Adam Othman

Holding onto promising stocks is usually the safest bet in shaky markets. But sometimes, selling at the right time or…

Read more »

Bank Stocks

A Surging Canadian Bank That’s a Top Stock to Buy Today

| Joey Frenette

National Bank of Canada (TSX:NA) shares could continue outdoing bigger peers in the banking scene.

Read more »

Investor wonders if it's safe to buy stocks now
Bank Stocks

Should You Buy TD Bank or Royal Bank Stock Today?

| Andrew Walker

Royal Bank is on a roll, but TD looks cheap.

Read more »

Bank Stocks

Should You Buy This Bank Stock for its 7.13% Dividend Yield?

| Amy Legate-Wolfe

This top bank stock offers a path forward during the last year of turbulence. However, investors today can lock up…

Read more »

Bank Stocks

Earnings Alert! 3 Top Reasons to Buy TD Bank Stock Now

| Jitendra Parashar

Here are the top three reasons that make TD Bank stock even more attractive right now for long-term income investors.

Read more »

Bank Stocks

Canada’s “Magnificent 2” Stocks: Soaring and Still Buys

| Amy Legate-Wolfe

These two Magnificent Two stocks are set to continue a magnificent performance. And now could be the best time to…

Read more »

Bank Stocks

Better Bank Stock for Long-Term Growth: RY or NA?

| Adam Othman

When you are betting on a stock long term, it’s a good idea to consider factors other than the obvious…

Read more »

Bank Stocks

Scotiabank Just Took a 14.9% Stake in KeyCorp, So Is BNS Stock a Buy?

| Joey Frenette

Scotiabank (TSX:BNS) stock is just one bank that's gotten more interesting after its latest U.S. investment.

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.