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

Toronto-Dominion Bank (TSX:TD) Stock: Buy it Before it Dominates the U.S.

| Andrew Button

If you're looking for a great dividend play, consider Toronto-Dominion Bank (TSX:TD) stock.

Read more »

Dividend Stocks

Got $1,000? 3 TSX Small-Cap Stocks That Could Double

| Sneha Nahata

The small-cap companies are delivering strong growth and have the potential to double in the medium term.

Read more »

Dividend Stocks

Market Correction? Get Ready to Buy Cheaper TSX Stocks

| Victoria Hetherington

If overbought stocks spark a widespread selloff, names like Scotiabank (TSX:BNS)(NYSE:BNS) could be worth buying on weakness.

Read more »

close-up photo of investor Warren Buffett
Bank Stocks

Warren Buffett: These 2 Industries Will Crash First!

| Amy Legate-Wolfe

After six months of nothing, Warren Buffett made some huge moves. Should you follow suit?

Read more »

Dividend Stocks

3 Ultra-High Yield Stocks to Grab in December

| Andrew Button

If you're looking for high yield in late 2020, look no further than Enbridge Inc (TSX:ENB)(NYSE:ENB).

Read more »

Stocks for Beginners

3 Stock Tips to Boost Your Returns in 2021 and Beyond

| Kay Ng

Not happy with your investment returns this year? Here are three tips to boost your returns for 2021 and beyond!

Read more »

Dividend Stocks

RBC (TSX:RY) Had Monster Earnings With a 44% Surge in Q4

| Adam Othman

Royal Bank of Canada has been a dependable stock for a long time. It has proven its mettle again in…

Read more »

Bank Stocks

CRA: Did You Claim Your $2,000?

| Amy Legate-Wolfe

There are a lot of tax credits out there this year, but if you're really in desperate need of cash,…

Read more »

Dividend Stocks

Over 60 and Not Sure If You Can Retire? Here’s a 3-Step Checklist

| Christopher Liew, CFA

People in their 60s who are not sure to retire can follow three steps to improve readiness. If you need…

Read more »

Tech Stocks

TFSA Investors: 2 Top Stocks to Buy in 2021 Now That the Contribution Limit Is Confirmed

| Nicholas Dobroruka

These two top Canadian stocks can provide TFSA investors with the perfect balance between growth and value.

Read more »

Bank Stocks

TSX Bank Earnings: Is Laurentian Bank Stock a Buy After its Q4 Event?

| Jitendra Parashar

Despite its better-than-expected Q4 earnings, Laurentian Bank of Canada’s (TSX:LB) stock is trading on a mixed note in December. Let’s…

Read more »

Dividend Stocks

Canada Revenue Agency: Your TFSA Limit Is $6,000 More in 2021

| Christopher Liew, CFA

TFSA users will have more room following the CRA’s announcement of the annual contribution limit in 2021. Consider investing in…

Read more »

Dividend Stocks

2 Cheap Dividend Stocks Yielding up to 5.3%

| Kay Ng

Don’t know where to park your money? Buy these discounted blue-chip dividend stocks for passive income.

Read more »

Bank Stocks

Double Your $2,000 With This 1 Amazing TSX Stock Right Now

| Jitendra Parashar

After the stocks have seen a sharp rally in the last couple of months, it isn't easy to find great…

Read more »

Stocks for Beginners

CRA: How to Use the TFSA to Turn Your $6,000 Contribution Into $1 Million!

| Amy Legate-Wolfe

You don't have to make risky choices to get rich, just find strong stocks that you can hold onto for…

Read more »

Dividend Stocks

Passive Income: 2 TSX Dividend Superstars

| Jared Seguin

Are you looking to bolster your passive income? These two TSX blue-chip stocks can provide reliable and juicy dividends to…

Read more »

Dividend Stocks

RRSP Investors: 2 Top Stocks to Own for 30 Years

| Andrew Walker

RRSP season is just around the corner. Here are two top stocks that could deliver solid gains for RRSP investors…

Read more »

Dividend Stocks

CPP Pension Users: You Can Increase Your CPP Payments by 42%

| Christopher Liew, CFA

Delaying the CPP until age 70 is a sure way to permanently increase the pension payments by 42%. However, to…

Read more »

Dividend Stocks

Living in BC? Get Up to $1,000 of Tax-Free Money in December

| Kay Ng

It can be as natural as breathing to get tax-free money all the time if you do this.

Read more »

Dividend Stocks

Toronto-Dominion Bank (TSX:TD) Stock: Grab the 4.4% Yield Now

| Andrew Button

After a massive fourth quarter earnings beat, The Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock is looking like a huge buy.

Read more »

Dividend Stocks

3 Top Canadian Dividend Stocks to Buy Ahead of 2021

| Stephanie Bedard-Chateauneuf, MBA

National Bank of Canada (TSX:NA), Canadian National Railway (TSX:CNR)(NYSE:CNI), and Telus (TSX:T)(NYSE:TU) are three top Canadian dividend stocks.

Read more »

Dividend Stocks

Got $1,000? Buy These 3 UNDERVALUED Dividend Aristocrats Right Now

| Sneha Nahata

I find significant value in the shares of these three Dividend Aristocrats. These companies could deliver above-average returns in the…

Read more »

Dividend Stocks

Warren Buffett Is Selling Bank Stocks: Should You, Too?

| Adam Othman

Buffett has made many unusual decisions this year, but his decision to almost eliminate its holdings in JP Morgan still…

Read more »

Tech Stocks

Young Investors: Buy These 3 Small-Cap Stocks With Huge Upside Potential

| Rajiv Nanjapla

Given their high growth potential and large addressable market, these three small-cap stocks can deliver superiors returns in the long…

Read more »

Dividend Stocks

TSX Dividend Stocks: 2 With Solid Yields

| Jared Seguin

Looking to buy some TSX dividend stocks? There are many great options out there, but these two heavyweights are worth…

Read more »

Bank Stocks

This Could Be the Best TSX Dividend Stock to Bet on Right Now

| Jitendra Parashar

Most major Canadian banks reported their latest quarterly results last week. Here's the bank stock -- with a high dividend…

Read more »

Dividend Stocks

Banks Will Never Be the Same After COVID-19 Is Over

| Adam Othman

Canada is facing the second wave of the pandemic, and this has halted the “normalizing” of work environments where employees…

Read more »

Bank Stocks

Why Royal Bank of Canada’s (TSX:RY) Q4 Earnings Are Worrisome

| Jitendra Parashar

Despite beating analysts' estimates, I find Royal Bank of Canada's (TSX:RY)(NYSE:RY) Q4 results worrisome. Here's my key reason for worry.

Read more »

Dividend Stocks

CRA Tax Savings: The RRSP Limit Is Increasing in 2021

| Adam Othman

Invest in Royal Bank of Canada to secure healthy long-term returns in a more spacious RRSP.

Read more »

Dividend Stocks

Got Some Idle Cash? Zoom in on These High-Growth TSX Stocks

| Sneha Nahata

The rally in these TSX stocks could sustain in 2021 and beyond, thanks to the positive industry trends. 

Read more »

Dividend Stocks

Got $6,000 in TFSA Funds to Invest? 2 Cheap Dividend Kings to Buy Right Now

| Joey Frenette

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Enbridge Inc. (TSX:ENB)(NYSE:ENB) are compelling dividend kings for income-seeking TFSA investors.

Read more »

Dividend Stocks

Canada Revenue Agency: Do You Need to Repay the CRA’s CERB?

| Joey Frenette

If you think you may have to repay some CERB double payments to the Canada Revenue Agency, consider selling this…

Read more »

Dividend Stocks

CPP Payments Are Rising in 2021:10.9% of Your Paycheck Could Disappear

| Christopher Liew, CFA

CPP users are biting the bullet again in 2021 as the third round of contribution rate means a smaller paycheck.…

Read more »

Dividend Stocks

3 Stocks That Could Set You Up With Generational Wealth

| Adam Othman

Relatively few people plan for their finances decades into the future. But it's not that difficult, especially if you plan…

Read more »

Dividend Stocks

Got $2,000? Buy These 2 Top Dividend Stocks That Are on Sale Right Now

| Nicholas Dobroruka

Find out which two dividend stocks I have on my watch list, not only because they have yields above 3.5%,…

Read more »

Dividend Stocks

Canada Revenue Agency: How to Claim the $1,984 Basic Personal Amount Tax Credit

| Kay Ng

Here's how you can save big CRA taxes and invest in your TFSA for passive income.

Read more »

Stocks for Beginners

Canada Revenue Agency: Did You Claim the $60,000 CEBA Benefit?

| Amy Legate-Wolfe

If you're a business struggling to make ends meet, make sure you take advantage of the extra $20,000 coming in…

Read more »

Dividend Stocks

Market Rally: 2 Dividend Stocks I’m Absolutely Holding Through 2021 and Beyond

| Kay Ng

Not sure where to park your money? Get nice income and steady price appreciation from these quality dividend stocks.

Read more »

Dividend Stocks

Did You Receive CERB Payments? Be Ready to Fork Over Taxes to the CRA

| Christopher Liew, CFA

CERB recipients in 2020 should be preparing for the taxes due on the benefits in 2021. The amount of the…

Read more »

Dividend Stocks

$27,830 RRSP Limit Max in 2021: Save on CRA Taxes

| Christopher Liew, CFA

Canadians saving for retirement can derive more tax savings again with the new RRSP maximum limit in 2021. Most RRSP…

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.