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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

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| 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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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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Is Now the Right Time to Buy Canadian Bank Stocks?

| Andrew Button

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2 Bank Stocks to Load Up on in a Recession

| Chris MacDonald

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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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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

2 Stocks to Buy and Hold Forever

| Mat Litalien, MBA

Part time investors are best to focus on stocks to buy that don't require constant monitoring. This is especially true…

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CERB Expires October 3 But This $2,000/Month Lasts Forever!

| Andrew Button

If you want to get a $2,000/month cash stream that lasts forever, consider investing in Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock.

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Bank Stocks

Will the Big 3 TSX Bank Stocks Cut Their Dividends?

| Kay Ng

Should you avoid the TSX bank stocks such as TD (TSX:TD)(NYSE:TD) stock like a plague or load them up like…

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TFSA Investing: Earn $350 Tax-Free Per Month!

| Jared Seguin

As the stock market remains unsettled, stocks can be had at decent prices. Find out which stocks you can target…

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Unpopular Opinion: TD (TSX:TD) Did Surprisingly Well in Q2

| Andrew Button

Despite a 50% decline in its profit, the Toronto-Dominion Bank (TSX:TD)(NYSE:TD) did surprisingly well in Q2.

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Dividend Stocks

TFSA Dividend Investors: Should You Buy BCE (TSX:BCE) or BMO (TSX:BMO) Stock?

| Andrew Walker

BCE (TSX:BCE) and Bank of Montreal (TSX:BMO) offer dividend yields near 6%. Is one a better buy today?

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TSX Index: 3 Cheap Stocks to Buy Now

| Mat Litalien, MBA

The TSX Index is rebounding, but there are several stocks such as Manulife Financial (TSX:MFC)(USA) that still offer investors excellent…

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Bank Stocks

Should You Buy Canadian Bank Stocks for Dividends?

| Kris Knutson

Investing in Canadian banks was a great strategy for decades. A small bank has cut its dividend, so will a…

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How to Max Your TFSA Limit With TSX Stocks

| Victoria Hetherington

Here’s how dividend stocks like Fortis Inc. (TSX:FTS)(NYSE:FTS) can help balance a Tax-Free Savings Account built around shorter-term capital gains.

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Bank Stocks

3 Top Canadian Bank Stocks to Buy in June

| Victoria Hetherington

Big Five banks like Scotiabank (TSX:BNS)(NYSE:BNS) had a mixed end to May. Here’s why that makes them a stronger buy…

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Bank Stocks

ALERT: Canadian Bank Dividend Cut! Will Other Canadian Bank Stocks Follow?

| Kay Ng

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Boost Both Your OAS and CPP Pension in 1 Fell Swoop

| Christopher Liew, CFA

The wise move for healthy would-be retirees is to delay the OAS and CPP. If you have other income sources…

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Bank Stocks

Got $1,000? A Top TSX Bank Stock to Buy While it Is Still Cheap

| Vineet Kulkarni

Canadian banks stood strong last week, driven by better-than-expected earnings. But this TSX bank stock notably stood out from peers.

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Dividend Stocks

TFSA 101: These 2 Dirt-Cheap Financial Stocks Are Begging to Be Bought!

| Joey Frenette

Contrarian dividend investors should buy Bank of Montreal (TSX:BMO)(NYSE:BMO) and another dirt-cheap financial stock for their TFSAs.

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Bank Stocks

This TSX Dividend Stock Is on an Acquisition Spree

| Aditya Raghunath

Is CI Financial (TSX:CIX) stock a good bet right now?

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Dividend Stocks

CERB Warning: Make $8000 in Dividend Income Instead

| Amy Legate-Wolfe

The CERB looks great on the surface, but don't be fooled. Investing in dividend income stocks is great this year,…

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Bank Stocks

This Canadian Bank Stock Is a Must-Buy Right Now

| Chris MacDonald

The coronavirus is presenting a unique opportunity to invest in long-term winners, including Scotiabank (TSX:BNS)(NYSE:BNS).

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Millennial Couples: Opportunity of a Decade to Invest for Your Future!

| Kay Ng

Many quality stocks are cheap from the market crash. For example, you can buy Scotiabank (TSX:BNS)(NYSE:BNS) for a big dividend…

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Bank Stocks

2 Regional Canadian Banks Far Cheaper Than the Big Six

| Joey Frenette

Canadian Western Bank (TSX:CWB) and Laurentian Bank (TSX:LB) are cheaper than the Big Six banks, but are they worthy buys?

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Bank Stocks

ALERT: 2 Super-Cheap Bank Stocks to Buy Today

| Ambrose O'Callaghan

Bank stocks have been battered, but I like the value offered by Laurentian Bank (TSX:LB) and Canadian Imperial Bank of…

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Bank Stocks

This TSX P/E Giant Wants to Pick Up Distressed Assets Amid the Pandemic

| Aditya Raghunath

Here's why Onex stock is a good buy for contrarian investors right now.

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Bank Stocks

Should You Buy TD (TSX:TD) Stock Now?

| Andrew Walker

TD (TSX:TD)(NYSE:TD) just reported Q2 2020 earnings. Is this the right time to buy the stock?

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Dividend Stocks

Are Your CPP Pension Payments Safe After This Market Crash?

| Christopher Liew, CFA

According to the Chief Actuary of Canada, the CPP is safe and sustainable for the next 75 years. If you…

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Attention: The Biggest Money Mistake Millennials Are Making!

| Kay Ng

You probably can’t believe that millennials are making this big money mistake. Here’s how not to be one of them.

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Is 6.5%-Yielding Canadian Imperial Bank of Commerce (TSX:CM) Stock a Buy?

| Karen Thomas, MSc, CFA

CIBC stock falls as soaring provisions for credit losses hit the bottom line with steep earnings declines.

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Bank Stocks

Are These Top Canadian Bank Stocks Buys Today?

| Victoria Hetherington

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is among a number of banks experiencing a steep drop in profits. Here’s what investors need to…

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3 Stocks to Buy With Dividend Yields of More Than 7%

| Haris Anwar

Investors who are looking to buy stocks that offer a higher dividend yield should focus on these three areas of…

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TFSA Investing: 3 TSX Dividend Stocks to Buy

| Jared Seguin

With markets remaining unsettled, those focused on TFSA investing can find cheap stocks. Find out which three have solid yields…

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Dividend Investing: 2 TSX Stocks to Bank On

| Jared Seguin

As markets remain unsettled, long-term investors can scoop up stocks for cheap. In particular, those focused on dividend investing can…

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Better Canadian Bank to Buy After Q2: TD Bank (TSX:TD) or Scotiabank (TSX:BNS)?

| Joey Frenette

TD Bank (TSX:TD)(NYSE:TD) just got clobbered post-earnings, making the Canadian bank a compelling bargain for long-term investors.

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CRA: Are Dividends Tax-Free in TFSAs?

| Kay Ng

There's no free lunch, but your Tax-Free Savings Account can earn tax-free returns. Well, mostly. Here are some exceptions.

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Revealed: My Top Canadian Bank Stock Pick for the Rest of 2020

| Nelson Smith

Most Canadian bank stocks should provide nice returns from here, but one has the potential to outshine the rest. Why…

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Dividend Stocks

Is Toronto-Dominion Bank (TSX:TD) Stock a Buy After Earnings Miss?

| Karen Thomas, MSc, CFA

Toronto-Dominion Bank stock is a top bank stock for the long-term after a weaker-than-expected earnings result.

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How to Prevent the CRA From Clawing Back Your $2,000 CERB!

| Adam Othman

Consider using your cash savings in the Bank of Montreal stock after learning how to avoid paying back your CERB…

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Dividend Stocks

How to Receive an Extra $300 OAS Boost and Avoid the 15% Clawback

| Christopher Liew, CFA

The one-time OAS payment is good news to seniors, but the OAS clawback remains the thorn. You can offset the…

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Dividend Stocks

Royal Bank of Canada (TSX:RY) Just Soared 12% — Time to Back up the Truck?

| Joey Frenette

Royal Bank of Canada (TSX:RY)(NYSE:RY) just rallied following a better-than-feared second-quarter earnings report. Should you buy RBC stock after the…

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Dividend Stocks

Why This Is the Time to Buy Canada’s Best Dividend Stocks

| Haris Anwar

Canada's beaten-down banking stocks have become attractive and offer one of the best avenues to earn steadily growing dividends.

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Dividend Stocks

$2,000 CRA Emergency CERB: Is it a Mistake?

| Christopher Liew, CFA

After creating the temporary CERB, many are calling on the federal government to make it a permanent universal basic income.…

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Bank Stocks

Recession Risk: Is TD Bank (TSX:TD) Still a Great Buy?

| Kris Knutson

Canadian banks are fantastic long-term investments. Even with the great run in the stock price and the grim economic future…

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Bank Stocks

Why Is Royal Bank of Canada (TSX:RY) Stock Rising?

| Sneha Nahata

2020 is going to be a tough year for banks. However, Royal Bank of Canada is still an excellent long-term…

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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.