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

Forget CIBC: 2 Canadian Dividend Stocks That Are a Better Value

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) and another top Canadian dividend stock could have more room to run than CIBC (TSX:CM)(NYSE:CM) in late…

Read more »

Bank Stocks

Why it’s Time to Be Bullish on Laurentian Bank Stock

| Chris MacDonald

Here's why investors ought to consider Laurentian Bank (TSX:LB) as a top long-term buy-and-hold play right now.

Read more »

Dividend Stocks

Top Canadian Stocks to Buy Ahead of Their Ex-Dividend Dates

| Vineet Kulkarni

As TSX stocks loiter around their all-time highs, this could be an apt time to amass some top Canadian dividend…

Read more »

Dividend Stocks

Why Scotiabank Stock Could Be a Steal at These Levels

| Chris MacDonald

Here's why long-term investors may want to consider Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) stock in this overvalued market today.

Read more »

Bank Stocks

Should You Buy Royal Bank or TD Stock Now?

| Andrew Walker

Royal Bank and TD Bank have rebounded sharply off the 2020 lows. Is one of these stocks a better buy…

Read more »

Tech Stocks

4 Canadian Stocks That Could Double Your Investments Over the Next 3 Years

| Rajiv Nanjapla

Given their healthy growth prospects, I expect these four Canadian stocks to deliver superior returns over the next three years.

Read more »

Tech Stocks

2 of the Best Canadian Stocks to Buy and Hold Forever

| Nicholas Dobroruka

Canadian stocks are flying, and I’m still buying. There’s no need to wait for a pullback if you’re adding these…

Read more »

Bank Stocks

Can National Bank Grow Into a “Big” Bank?

| Chris MacDonald

Could National Bank of Canada (TSX:NA) eventually grow into one of Canada's largest banks? Let's discuss.

Read more »

Dividend Stocks

Do You Live and Work in Canada? Here’s How to Earn a $2,000 Tax Credit

| Christopher Liew, CFA

Canadian taxpayers should know this early how to earn a substantial tax credit for the 2021 income year. Also, earning…

Read more »

investment research
Energy Stocks

3 Top Canadian Stocks to Build a Portfolio on

| Chris MacDonald

These three top Canadian stocks are ones investors would be remiss to ignore at these levels today.

Read more »

Dividend Stocks

Got $1,000? 3 Top TSX Stocks to Buy Today!

| Aditya Raghunath

Long-term investors can look to buy TSX stocks such as Lightspeed POS and Bank of Montreal to benefit from market-beating…

Read more »

Dividend Stocks

The 3 Best Canadian Stocks I’d Buy With $300 Right Now

| Sneha Nahata

Investors with a long-term mindset can build a significant amount of wealth by investing in the stock market.

Read more »

Bank Stocks

3 of the Best TSX Stock to Buy on a Dip in June 2021

| Jitendra Parashar

Here are three fundamentally strong TSX stocks that are worth buying on a dip in June 2021.

Read more »

Dividend Stocks

Summer 2021 Top Pick: Manulife Stock

| Chris MacDonald

Here's why investors will want to keep an eye on Manulife Financial (TSX:MFC)(NYSE:MFC) right now.

Read more »

Bank Stocks

Why Big Canadian Banks Look Attractive Right Now

| Chris MacDonald

Here's why both Royal Bank of Canada (TSX:RY)(NYSE:RY) and Bank of Montreal (TSX:BMO)(NYSE:BMO) could have more upside on the horizon.

Read more »

Bank Stocks

Is National Bank a Buy Following Earnings?

| Chris MacDonald

Here's why I think long-term investors need to keep National Bank (TSX:NA) on their watch lists right now.

Read more »

Bank Stocks

TFSA Dividend Value Stocks: 1 Undervalued Bank to Hold Forever

| Nikhil Kumar

With a diverse and growing base of customers and leading franchises in diversified markets, TD Bank (TSX:TD)(NYSE:TD) continues to earn…

Read more »

Dividend Stocks

3 Top TSX Stocks to Buy With $1,000 in June 2021

| Vineet Kulkarni

Do you think Canadian markets will continue to soar higher? Here are top three TSX stocks that offer decent growth…

Read more »

Dividend Stocks

3 High-Growth TSX Stocks to Buy and Hold Forever

| Adam Othman

A powerfully high growth rate and longevity don’t work together well. But with the right stocks, you might get the…

Read more »

Dividend Stocks

Inflation Got You Down? Here Are 2 Top TSX Stocks to Buy Today

| Chris MacDonald

Here's why Restaurant Brands (TSX:QSR)(NYSE:QSR) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) remain two of my top picks today.

Read more »

Dividend Stocks

Is Bank of Nova Scotia Stock a Buy Right Now?

| Andrew Walker

Bank of Nova Scotia pays a great dividend and has strong growth potential in its international operations. Is this the…

Read more »

analyze data
Dividend Stocks

3 Top Stocks for Investors Seeking Growth, Income, and Value

| Chris MacDonald

Here are three of my top picks I'd highly recommend investors consider in this current environment.

Read more »

Dividend Stocks

Why CIBC Stock Could Continue to Run Red Hot

| Chris MacDonald

Can Canadian Bank of Commerce (TSX:CM)(NYSE:CM) continue its run, or will this stock flat line from here?

Read more »

Dividend Stocks

Looking for a Reliable Income Stream? Buy These 3 Top TSX Dividend Stocks Today

| Chris MacDonald

These three top dividend picks are among the best income stocks in Canada and in any market, really.

Read more »

Dividend Stocks

New Investors: Earn $100 a Month in Dividend Income

| Kay Ng

Here’s how to earn $100 a month in dividend income. After you achieve $100/month, you can easily follow the same…

Read more »

Bank Stocks

The 3 Best Canadian Dividend Stocks to Buy Now With $500

| Aditya Raghunath

Investing in quality dividend stocks such as Emera and Algonquin Power & Utilities will allow you to generate a steady…

Read more »

Dividend Stocks

Analysts Are Getting More Bullish on BMO Stock, and You Should, Too

| Chris MacDonald

For investors seeking a high-quality company that still trades at a discount to fair value, Bank of Montreal (TSX:BMO)(NYSE:BMO) could…

Read more »

Dividend Stocks

Why TD Stock Remains a Strong Buy as Cash Hoard Builds

| Chris MacDonald

Here's why Toronto-Dominion Bank (TSX:TD)(NYSE:TD) should be in every long-term investor's portfolio right now.

Read more »

Dividend Stocks

3 Dividend Aristocrats That Have Beaten the Market This Year

| Jed Lloren

Who says dividend stocks need to be slow movers? These three stocks have beaten the market so far this year.

Read more »

Tech Stocks

3 Top Canadian Stocks to Buy Now and Hold Forever

| Sneha Nahata

Thanks to the improving macro environment, I expect these three Canadian stocks to consistently deliver superior returns.

Read more »

Tech Stocks

4 of the Best Canadian Stocks to Buy in June 2021

| Nicholas Dobroruka

Canadian stocks are trading at all-time highs, but I’m still buying. Here are four picks that are at the top…

Read more »

Dividend Stocks

3 of the Best Canadian Dividend Stocks for a Lifetime of a Passive Income

| Sneha Nahata

Investors eyeing a steady passive income for a lifetime could consider buying these top dividend-paying Canadian stocks right now.

Read more »

Dividend Stocks

3 Dividend Studs That Pay Rivers of Cash

| Andrew Button

High-yield dividend stocks like TransAlta Renewables (TSX:RNW) throw off rivers of cash.

Read more »

Bank Stocks

The Best Stocks to Buy and Hold Forever

| Karen Thomas, MSc, CFA

The best stocks to buy now include TD Bank stock and Fortis stock. These are two quality stocks that are…

Read more »

Dividend Stocks

4 Stocks for a Diversified Growth Portfolio

| Adam Othman

Diversification is important for both dividend and growth portfolios, but its impact is more obvious in growth-oriented portfolios.

Read more »

Energy Stocks

Got $1,000? Buy These 4 Top Canadian Stocks Right Now

| Rajiv Nanjapla

Given their healthy growth prospects and attractive valuations, these four Canadian stocks could deliver superior returns this year.

Read more »

Dividend Stocks

1 Soaring Canadian Stock That’s Just Getting Started!

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) is a soaring Canadian stock that still looks incredibly undervalued after it clocked in an incredible Q2…

Read more »

Dividend Stocks

1 Big Bank Stock I’d Buy Before it Jumps to $100

| Christopher Liew, CFA

Canada’s third-largest bank reported eye-popping Q2 fiscal 2021 quarterly results. Now is a good time as any to buy Bank…

Read more »

Dividend Stocks

Want to Build a Solid Retirement Corpus? Buy These 3 Canadian Stocks Right Now!

| Sneha Nahata

Planning to retire rich? Consider adding these low-risk and reliable Canadian stocks to your portfolio right now.

Read more »

Stocks for Beginners

3 Hot Canadian Stocks to Buy Right Now

| Joey Frenette

Bank of Montreal (TSX:BMO)(NYSE:BMO) and another top Canadian stock that value investors should buy and hold forever this June 2021.

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.