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

stock research, analyze data
Dividend Stocks

4 Undervalued TSX Stocks to Buy in June 2021

| Sneha Nahata

I see multiple Canadian stocks trading cheaper and offering excellent value at current price levels.

Read more »

Dividend Stocks

3 of the Best TSX Stocks to Buy With $3,000 in June 2021

| Sneha Nahata

These fundamentally strong TSX stocks can beat the benchmark index by a wide margin and deliver stellar returns.

Read more »

Bank Stocks

TD Bank: 1 of the Best Canadian Dividend Stocks to Bank On in June 2021

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) stock is the new momentum stock, but there are a tonne of reasons to continue buying as…

Read more »

Dividend Stocks

How to Get Your TFSA to $1,000,000 by Age 45

| Christopher Liew, CFA

Building a $1 million TFSA is a daunting task, although achievable in a longer time frame. Users’ core holdings should…

Read more »

Dividend Stocks

TSX Stocks: Will the Markets Continue to Rally?

| Vineet Kulkarni

TSX stocks: Amid the broad market rally, it can still be difficult to pick outperforming stocks. That's why investors should…

Read more »

Dividend Stocks

Inflation Is a Danger to Retirees

| Andrew Button

Inflation is a danger to those living on fixed incomes, but REITs like NorthWest Healthcare Properties REIT actually profit from…

Read more »

Dividend Stocks

3 Top Canadian Stocks to Buy for Under $100 in June 2021

| Nicholas Dobroruka

Canadian investors should be loading up on top stocks today. Here are three Canadian stocks to put on your watch…

Read more »

Bank Stocks

2 of the Best Canadian Stocks to Buy in June

| Stephanie Bedard-Chateauneuf, MBA

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and ATS Automation (TSX:ATA) are two of the best Canadian stocks to buy in…

Read more »

Tech Stocks

4 Rallying Canadian Stocks to Buy Right Now

| Rajiv Nanjapla

With these four Canadian stocks rallying over 15% in this quarter, I expect the uptrend to continue, given their healthy…

Read more »

Bank Stocks

TFSA Investors: 1 Dirt-Cheap Bank Stock to Buy Now

| Nikhil Kumar

VersaBank (TSX:VB) has the ability to scale up operations to address large-market opportunities and develop innovative solutions.

Read more »

Dividend Stocks

Should You Buy CIBC Stock Now?

| Andrew Walker

CIBC stock just hit a record high. Time to buy?

Read more »

Dividend Stocks

3 Top Canadian Dividend Stocks in My Buy-and-Hold Portfolio

| Kay Ng

I’m buying and holding these top Canadian dividend stocks for a nice income that’s growing at a pleasing rate.

Read more »

Dividend Stocks

Dividend Investing: 2 TSX Kings to Buy

| Jared Seguin

When it comes to dividend investing, investors should focus on stocks with dividend sustainability for the best results over time.

Read more »

Dividend Stocks

TD Stock a Buy as Inflation Fears Weigh on Markets

| Aditya Raghunath

TD Bank stock has a forward yield of 3.6%, which should allow you to outpace long-term inflation rates.

Read more »

Dividend Stocks

2 Top Value Stocks to Add for Defensiveness Today

| Chris MacDonald

Here's why Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and Barrick Gold (TSX:ABX)(NYSE:GOLD) are among my top picks today.

Read more »

Bank Stocks

TD Stock (TSX:TD): Q2 Earnings Confirm Banking Boom

| Karen Thomas, MSc, CFA

TD stock is soaring, as Canadian banks benefit from the accelerating economic recovery and a stronger-than-expected pandemic resiliency.

Read more »

Dividend Stocks

3 Top Undervalued TSX Stocks to Add Today

| Chris MacDonald

These three top Canadian stocks could provide long-term investor portfolios with a very nice boost over the long haul.

Read more »

Bank Stocks

3 Top TSX Stocks to Buy Right Now With $1,000

| Sneha Nahata

These TSX-listed stocks have multiple growth catalysts and are likely to deliver strong returns over the next decade.

Read more »

Bank Stocks

3 of the Best TSX Blue-Chip Stocks That Could Skyrocket in June 2021

| Jitendra Parashar

Here are three of the best stocks that investors can buy today to get solid returns on their investment. I…

Read more »

Dividend Stocks

2 Dividend Aristocrats to Buy and Hold for Decades

| Christopher Liew, CFA

You don’t need to evaluate the TSX’s Dividend Aristocrats one by one. Royal Bank of Canada stock and Canadian Utilities…

Read more »

Dividend Stocks

27% of Canadians Are Making This Huge TFSA and RRSP Mistake

| Christopher Liew, CFA

Canadians can avoid committing a huge TFSA and RRSP mistake by understanding the critical difference between the two investment vehicles.…

Read more »

Bank Stocks

RBC (TSX:RY) Stock’s Jump in Q2 2021 Earnings Explained

| Kay Ng

If you like RBC (TSX:RY)(NYSE:RY) stock or another big Canadian bank, this is a must read!

Read more »

Dividend Stocks

3 Canadian Dividend Stocks to Buy Right Now

| Nicholas Dobroruka

Looking to build a passive-income stream? Here are three reliable dividend stocks that can help you do exactly that.

Read more »

Tech Stocks

4 Top Canadian Growth Stocks Worth Buying Right Now

| Rajiv Nanjapla

These four high-growth Canadian stocks can outperform the broader equity markets this year.

Read more »

Bank Stocks

3 Top Canadian Stocks to Buy Now and Own for 25 Years

| Andrew Walker

These top Canadian stocks have delivered solid results for decades.

Read more »

Dividend Stocks

3 Top Bargain Stocks to Buy Today With $1,000

| Sneha Nahata

I see substantial value in several TSX-listed stocks, despite the stellar recovery rally in one year.

Read more »

Bank Stocks

Bank of Montreal (TSX:BMO) Earnings Soar As an Economic Recovery Unfolds

| Karen Thomas, MSc, CFA

BMO stock continues to climb higher as the bank reports better-than-expected Q2 earnings and indicates a strong economic recovery ahead.

Read more »

Dividend Stocks

80% of Canadians Are Making This Common TFSA Mistake

| Christopher Liew, CFA

Canadians with TFSAs should be maximizing their yearly limits to take full advantage of the tax-free benefits. For lasting non-taxable…

Read more »

Dividend Stocks

Canadian Banks Ace Q2 Earnings: Here’s a Top TSX Stock to Buy Today

| Vineet Kulkarni

Canadian banks have given an encouraging outlook of the economy for the post-pandemic world. Here's a top TSX stock to…

Read more »

Bank Stocks

The Reality Behind Bank of Montreal (TSX:BMO) Stock’s Impressive Q2 2021 Earnings

| Kay Ng

If you like Bank of Montreal (TSX:BMO)(NYSE:BMO) stock or another of the big Canadian banks, this is a must-read!

Read more »

Dividend Stocks

Canadian Bank Stocks Are Crushing it in 2021

| Andrew Button

Canadian Bank stocks like the Toronto-Dominion Bank (TSX:TD)(NYSE:TD) are crushing it in 2021.

Read more »

Dividend Stocks

3 Top TSX Stocks to Buy This Summer

| Chris MacDonald

These three top picks of mine are perfect for long-term investors seeking a blend of growth, income, and value in…

Read more »

Dividend Stocks

2 Amazing Buy-and-Hold Picks for Long-Term Investors

| Chris MacDonald

Here's why Royal Bank of Canada (TSX:RY)(NYSE:RY) and Alimentation Couche-Tard (TSX:ATD.B) remain top picks for long-term investors today.

Read more »

Tech Stocks

Got $4,000? 4 Top TSX Stocks to Buy Right Now

| Sneha Nahata

I expect an economic recovery, solid consumer demand, and corporate earnings growth to drive fundamentally strong stocks higher.

Read more »

Bank Stocks

2 Dominant Canadian Dividend Kings to Buy in June 2021

| Joey Frenette

Royal Bank of Canada (TSX:RY)(NYSE:RY) and CN Rail (TSX:CNR)(NYSE:CNI) are great Dividend Kings to pick up this June 2021.

Read more »

Dividend Stocks

Got $1,000? Buy These 3 Undervalued Gems Today

| Chris MacDonald

Here are three of my top picks for investors seeking value right now.

Read more »

Dividend Stocks

3 Top Dividend Stocks to Buy This Summer

| Chris MacDonald

These three top dividend picks are perfect for investors seeking long-term income growth and stability over time.

Read more »

calculate and analyze stock
Dividend Stocks

2 Long-Term Income Plays to Buy Now

| Demetris Afxentiou

Looking for one or more long-term income plays for your portfolio? Here are two great stocks to consider buying now…

Read more »

Bank Stocks

2 of the Best Canadian Bank Stocks to Buy for 2021

| Sneha Nahata

Despite the resurgence of the coronavirus, shares of the top Canadian banks are holding strong.

Read more »

Dividend Stocks

3 Canadian Stocks to Buy in a Bear Market

| Andrew Button

If you're worried about a bear market, you could consider investing in "all-weather" stocks like Canadian National Railway (TSX:CNR)(NYSE:CNI).

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.