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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?

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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.…

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| Adam Othman

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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…

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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.

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Bank Stocks

Better Buy: RBC Stock or the Entire TSX?

| Brian Paradza, CFA

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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.

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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.

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Recent Bank Stocks News

Dividend Stocks

CERB Recipients: An End to CRA Payments

| Debra Ray

Prepare now for the end of CRA's CERB payments by investing in top name TSX stocks like Canadian Imperial Bank of…

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Dividend Stocks

Value Stocks: Is the TSX Overvalued or Heating Up?

| Debra Ray

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock is a great value investment, regardless of whether you think the TSX may be overvalued.

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Dividend Stocks

TFSA Investors: 5 Canadian Dividend Growth Stocks for Your Portfolio

| Aditya Raghunath

Dividend investors can consider stocks such as Canadain Utilities (TSX:CU) and Enbridge (TSX:ENB) for their TFSA portfolio.

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Bank Stocks

Buy Toronto-Dominion Bank Stock (TSX:TD) As the Unemployment Rate Improves

| Karen Thomas, MSc, CFA

The Canadian unemployment rate has inched upward in June, boosting confidence in bank stocks like Toronto-Dominion Bank stock,

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Dividend Stocks

Beyond CRA’s CERB: How to Generate a Permanent Monthly Payout

| Aditya Raghunath

While the CERB provides a temporary payout of $2,000 a month, quality dividend stocks can generate a permanent passive-income stream…

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Dividend Stocks

2 Top Canadian Dividend Stocks Now Yielding 6% for Your TFSA Pension Plan

| Andrew Walker

Here's why Bank of Nova Scotia and another top Canadian dividend stock deserve to be on your radar today.

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Energy Stocks

Enbridge Vs. Bank of Nova Scotia: Which Stock Is a Better TFSA Buy?

| Haris Anwar

Enbridge (TSX:ENB)(NYSE:ENB) and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) are great candidates for your TFSA. Let's find out which one is…

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Bank Stocks

Got $5,000 to Invest? Buy This Beaten-Down Stock for Your TFSA

| Haris Anwar

The TFSA is one of the best saving tools for young investors in Canada. Here is how you can use…

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Dividend Stocks

TFSA Investors: 2 Dividend Stocks to Buy in the Next Market Crash

| David Jagielski

Investors should have Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and this other stock on their watchlists in case there's another correction…

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Dividend Stocks

3 Dividend-Paying Stocks I’m Buying Next

| Sneha Nahata

Now is the time to switch to these dividend-paying TSX stocks.

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Dividend Stocks

Dividend Investors: Should You Buy Telus (TSX:T) or TD (TSX:TD) Stock Today?

| Andrew Walker

Telus (TSX:T) and TD (TSX:TD) are two of Canada's top dividend stocks. Is one a better bet today?

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Bank Stocks

Forget CERB: This Could Help Bridge the Income Gap and Avoid Tapping Into Retirement Savings

| Sneha Nahata

Having a second income stream could help bridge the income gap.

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Dividend Stocks

CERB Extended: You Can Get 2 More Months and an Extra $4,000

| Christopher Liew, CFA

Canadian employees and workers affected by COVID-19 gets an additional CERB payment of $4,000. However, people can get off government…

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Bank Stocks

A Market Crash Is Coming: How to Prepare

| Stephanie Bedard-Chateauneuf, MBA

The stock market rally has been fueled by investors' optimism about the recovery. But if the economy doesn't rebound as…

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Bank Stocks

Wealthsimple Is Canada’s Robinhood: How Can Investors Benefit?

| Mat Litalien, MBA

Wealthsimple is quickly becoming a leading disruptor and taking aim at Canada's banking system. Power Corp of Canada (TSX:POW) is…

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Dividend Stocks

Your TFSA Portfolio: These Dividend Aristocrats Can Earn You $5,500 a Year

| Puja Tayal

The COVID-19 pandemic has reiterated the need for passive income. You can make your TFSA portfolio earn you $5,500 a…

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Dividend Investing: 2 Giants Yielding Over 5%

| Jared Seguin

Looking for top stocks when it comes to dividend investing? These two TSX giants are sporting rock-solid yields over 5%…

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How to Make $1,000 a Month in Passive Income

| Kay Ng

Here are three BIG dividend stocks for passive income that allow you to sleep well at night.

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Canada Revenue Agency: How Retired Couples Can Get an Extra $567 Per Month Tax-Free

| Andrew Walker

Here's how Canadian pension recipients can increase retirement income and pay zero extra taxes to the CRA.

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Bank Stocks

3 Reasons to Avoid Canadian Bank Stocks Right Now

| Victoria Hetherington

Stocks like BMO (TSX:BMO)(NYSE:BMO) might not suit certain investors right now. Here’s why bank stocks could be heading for some…

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Financial Stocks: 3 TSX Stars With Big Yields

| Jared Seguin

With markets relatively stagnant as of late, some stocks are offering good long-term value. These three financial stocks are great…

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Dividend Aristocrats to Buy in July

| Mat Litalien, MBA

Canadian Dividend Aristocrats are undeperforming and stocks such as the Bank of Montreal (TSX:BMO)(USA) are now value stocks.

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3 High-Yielding Stocks Whose Dividends Will Double Over the Next Decade

| Kyle Walton

These three dividend stocks have high starting yields and high dividend-growth rates, which makes them perfect for generating growing income…

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Dividend Stocks

COVID-19: Could a Second Wave Spark Another Stock Market Crash?

| Joey Frenette

Royal Bank of Canada (TSX:RY)(NYSE:RY) and Canadian banks could find themselves in hot water if another COVID-19 wave crashes the…

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Dividend Stocks

2 Bank Stocks to Buy That Are Yielding Over 6%

| Karen Thomas, MSc, CFA

Canadian Imperial Bank of Commerce stock and Bank of Nova Scotia stock are two bank stocks to buy that can…

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Dividend Stocks

TFSA Investors: 2 Dividend Stocks to Buy and Never Sell

| David Jagielski

Fortis Inc (TSX:FTS)(NYSE:FTS) and this other stock are perfect investments to buy and forget about.

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Want to Retire on ONLY Your OAS and CPP Pension? Move Somewhere Cheap!

| Christopher Liew, CFA

Retirees relying on only the OAS and CPP should include downsizing as an option. If not, it would be best…

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3 Dividend Kings to Buy Cheap Now and Hold Forever

| Christopher Liew, CFA

Investors should be investing in or including dividend kings on their buy lists. The Canadian Western Bank stock, TC Energy…

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SUPER SALE: 3 Dividend Stocks That Are Still Crazy Cheap

| Amy Legate-Wolfe

If you're looking for dividend stocks, there are a lot of bargain options. But these three offer bargains and stable…

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Here’s How the CERB Payments Could Change

| David Jagielski

If you want a more consistent stream of income than the CERB, consider buying shares of Bank of Montreal (TSX:BMO)(NYSE:BMO).

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Retire Rich: 5 Top Canadian Stocks to Own for 25 Years

| Andrew Walker

Here's a proven strategy to help Canadian investors retire wealthy.

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2 Growth Stocks to Buy Before August

| Ryan Vanzo

If you want to compound your capital quickly, you'll need promising growth stocks like goeasy Ltd (TSX:GSY) and BlackBerry Ltd.…

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Emergency $500 OAS and GIS Boost: Can You Get it?

| Christopher Liew, CFA

The one-time OAS and GIS boost in 2020 is very timely, given the financial challenges Canadian seniors are facing due…

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Bank Stocks

My Top 3 Bank Stocks to Buy in July

| Ambrose O'Callaghan

Canada’s economy is on the mend, which is good news for top banks stocks like Toronto-Dominion Bank (TSX:TD)(NYSE:TD) this summer.

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Dividend Stocks

TFSA Income Alert: 3 Top Stocks Now Yielding 6-9%

| Andrew Walker

Here's why Enbridge (TSX:ENB)(NYSE:ENB) and another two top stocks with high yields deserve to be on your radar today.

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Income Investing: 2 Dividend Machines to Buy

| Jared Seguin

Looking to add to an income investing strategy while stocks are cheap? Check out two TSX giants that should be…

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Retirees: How to Use Dividend Stocks to Boost Pension Income and Avoid OAS Clawbacks

| Andrew Walker

Here's how retirees can increase pension income without paying more taxes or being hit with CRA clawbacks on OAS pension…

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Dividend Stocks

Buy Alert: 3 TSX Picks That Are Too Cheap to Ignore

| Chris MacDonald

My top three value picks are Manulife Financial Corp. (TSX:MFC)(NYSE:MFC), Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM), and CCL Industrial Inc. (TSX:CCL.B).

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Dividend Stocks

Forget the GST/HST Credit! Pay Yourself $115 Quarterly With These 3 Dividend Stocks

| Kyle Walton

These three dividend stocks will provide a predictable and growing quarterly income stream that will make you forget all about…

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Dividend Stocks

TFSA Users: $10,000 in This 6.38% Stock Pays $638 Per Year

| Christopher Liew, CFA

The 2020 financial crisis gives enough reason to increase savings. TFSA users with $10,000 capital can earn $638 in tax-free…

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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.