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

Energy Stocks

Got $1,000? Buy These 4 Canadian Stocks to Earn Superior Returns

| Rajiv Nanjapla

Despite the volatile environment, these four Canadian stocks could deliver superior returns this year.

Read more »

Dividend Stocks

Canadians in Your 20s: How to Retire in Your 30s

| Christopher Liew, CFA

Many millennials have ways to achieve financial independence in the hope of retiring early. One proven way to amass retirement…

Read more »

Tech Stocks

3 High-Growth Canadian Stocks to Buy With $3,000

| Sneha Nahata

The gradual improvement in the economy, favourable secular industry tailwinds and revival in demand provide a solid foundation for outsized…

Read more »

Dividend Stocks

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

| Vineet Kulkarni

Equities have been relatively stable and continue to offer decent prospects. Here are three top TSX stocks to consider for…

Read more »

Dividend Stocks

3 TSX Stocks to Buy Now That Could Make You Very Rich

| Sneha Nahata

The ongoing vaccination efforts, steady improvement in the economy, and revival in demand provide a long runway for growth.

Read more »

online shopping
Tech Stocks

Canadian Investors: Where to Invest $1,000 Right Now?

| Sneha Nahata

Where's the best place to invest right now?

Read more »

Energy Stocks

4 Canadian Dividend Stocks to Buy and Hold Forever

| Rajiv Nanjapla

Given their recession-proof business models, stable financial positions, and healthy dividend yields, these four Canadian stocks are excellent long-term bets.

Read more »

Energy Stocks

3 of the Best Under-$100 Canadian Stocks to Buy Right Now

| Nicholas Dobroruka

Do you have $100 available to invest in the stock market? If so, here are three top picks that should…

Read more »

Dividend Stocks

How to Battle Plunging Markets: Get Defensive With These 2 Stocks

| Chris MacDonald

Here are two stocks I'd recommend investors that are worried about a stock market correction consider right now.

Read more »

Dividend Stocks

2 Top Financials Stocks to Buy Right Now

| Chris MacDonald

Here's why Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Manulife Financial (TSX:MFC)(NYSE:MFC) are two great financials stock today.

Read more »

Bank Stocks

3 Canadian Stocks to Watch Next Week

| Amy Legate-Wolfe

Next week is earnings week for Canadian stocks and the Big Six banks! So, watch closely and see if now…

Read more »

Dividend Stocks

Best Canadian Stocks: 3 to Watch

| Jared Seguin

Looking to buy some of the best Canadian stocks? These three names are sure to be top performers moving forward…

Read more »

Dividend Stocks

Canadian Investors: Here Are 3 of the Most Undervalued Stocks on the TSX

| Joey Frenette

Check out the following three undervalued TSX stocks that I believe could outperform the TSX over the next two to…

Read more »

Tech Stocks

Income Investing: 2 Elite Blue Chips to Buy

| Jared Seguin

Income investing fans are usually after high-yielding TSX stocks. These two blue-chip names both offer great long-term return potential.

Read more »

stock research, analyze data
Dividend Stocks

1 Top Canadian Financials Stock I’d Buy Right Now

| Chris MacDonald

Here's why I think Manulife Financial (TSX:MFC)(NYSE:MFC) should be on every investor's watch list right now.

Read more »

Bank Stocks

TSX Dividend Stocks: 2 to Bank On

| Jared Seguin

When it comes to finding top TSX dividend stocks, Canadian bank stocks are a good place to look. These two…

Read more »

Stocks for Beginners

New Investors: The Best Stocks to Buy Right Now

| Amy Legate-Wolfe

If you're looking for the best stocks to buy right now, start your portfolio off with stocks in this industry…

Read more »

Dividend Stocks

3 Top Canadian Stocks to Buy if You Have $3,000

| Adam Othman

Half the total contribution room for a TFSA this year is a decent enough sum to start building a nest…

Read more »

Energy Stocks

The Best Stocks to Buy Right Now for a Pandemic Rebound

| Amy Legate-Wolfe

The best stocks to buy right now are those that will come out of this pandemic relatively unscathed yet continue…

Read more »

Dividend Stocks

The Best Canadian Dividend Stocks to Buy Right Now

| Vineet Kulkarni

Looking for passive income? Here are some of the top Canadian dividend stocks investors can consider for the long term.

Read more »

Dividend Stocks

What Will High Inflation Mean for the Canadian Stock Market?

| Adam Othman

Inflation usually has a positive impact on the stock market, but the impact of the inflation brought on by the…

Read more »

Dividend Stocks

3 Top TSX Dividend Stocks to Buy Today

| Jed Lloren

Which three TSX dividend stocks should you put at the top of your buy list?

Read more »

Dividend Stocks

2 Canadian Stocks That Are Great Long-Term Investments

| Christopher Liew, CFA

The quality of dividends and sustainability are the hallmarks of great long-term investments. On the TSX, Bank of Montreal and…

Read more »

Dividend Stocks

2 Forever Stocks to Hold for the Next 100 Years

| Christopher Liew, CFA

Canadians can develop lasting friendships in the stock market. If you’re building a nest egg for retirement, invest in the…

Read more »

Energy Stocks

Canadian Investors: 3 Top Stocks for Building Long-Term Wealth

| Nicholas Dobroruka

The stock market is one of your best bets for building wealth over the long term. Here are three top…

Read more »

Dividend Stocks

Wealthsimple’s $5 Billion Valuation: Why Big Banks Should Take Note

| Christopher Liew, CFA

The big banks in Canada invest heavily in technology and can compete with FinTech giant Wealthsimple. For investors looking for…

Read more »

Tech Stocks

Have $1,000? Here’s Where to Invest in May 2021

| Sneha Nahata

The economic expansion, increasing business activities, and revival in consumer demand provide good reasons to buy top Canadian stocks right…

Read more »

Dividend Stocks

CCB Young Child Supplement 2021: Do You Qualify?

| Christopher Liew, CFA

Families with children under six and eligible to receive the CCB will have extra support starting May 2021 through the…

Read more »

Dividend Stocks

Got $2,000? 4 Canadian Bank Stocks to Buy and Hold Forever

| Sneha Nahata

A steady improvement in the economy and recovery in consumer demand is likely to boost banking stocks significantly.

Read more »

Dividend Stocks

Where to Drop an Extra $5,000 Today

| Demetris Afxentiou

If you had an extra $5,000 today to invest, what stock would you choose? Here’s one option that can provide…

Read more »

Dividend Stocks

TD Bank Stock’s Incredible Rally Is Far From Over

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) is picking up momentum, but the high-yield stock is still a top TSX buy for Canadian investors…

Read more »

investment research
Dividend Stocks

3 Top TSX Dividend Aristocrats to Buy Today

| Jed Lloren

Dividend-paying stocks have been the big winners in the stock market this year. Which three stocks should investors consider adding…

Read more »

Dividend Stocks

This Top Canadian Bank Is Trying to Get Tech Heavy

| Chris MacDonald

Here's why Royal Bank of Canada (TSX:RY)(NYSE:RY) ought to be on investor watch lists right now.

Read more »

Bank Stocks

The Best TSX Stocks to Invest $5,000 in Right Now

| Sneha Nahata

I see top TSX stocks trading at reduced prices, providing an excellent opportunity for investors to park their money in…

Read more »

Dividend Stocks

3 Ways to Avoid Ruining Your Retirement by Making Investment Errors

| Christopher Liew, CFA

Retirement planning to a serious undertaking that leaves no room for error. For lasting income, the Bank of Montreal stock,…

Read more »

close-up photo of investor Warren Buffett
Dividend Stocks

As Markets Touch Record Highs, Warren Buffett Looks to Be Wary of Valuations

| Vineet Kulkarni

The broader markets have shown a remarkable bounce-back rally since last year, but Warren Buffett has largely been a net…

Read more »

analyze data
Bank Stocks

3 of the Best TSX Stocks to Buy in May 2021

| Nicholas Dobroruka

Don’t let the volatility stop you from investing today. Here are three Canadian stocks that should be at the top…

Read more »

Tech Stocks

Have $3,000? 3 Top Canadian Companies to Buy Now

| Sneha Nahata

Long-term investors should consider buying the dip in fundamentally strong Canadian stocks.

Read more »

investment research
Dividend Stocks

3 Dividend Studs to Grab in May

| Andrew Button

Canadian dividend stocks like Enbridge Inc (TSX:ENB)(NYSE:ENB) are looking good.

Read more »

online shopping
Tech Stocks

4 Top Canadian Stocks I’d Buy with $4,000

| Sneha Nahata

Long-term investors shouldn’t worry much as there are plenty of fundamentally strong stocks worth investing in.

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.