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

Bank Stocks

Does Size Matter When It Comes to Investing?

| Chris MacDonald

During a volatile market and historic pandemic, investors look for a strategy. Read this article on whether the size of…

Read more »

Bank Stocks

ALERT! TD Bank (TSX:TD) Stock Is a No-Brainer Buy

| Ambrose O'Callaghan

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock has struggled along with its peers, but I like TD Bank as a buy-the-dip opportunity for…

Read more »

Dividend Stocks

$500/Week CERB Crisis Money: Beware of the CRA Taxes

| Christopher Liew, CFA

The CERB is taxable, so if possible, leave a portion for taxes. But earnings from a dividend-payer like the National…

Read more »

Bank Stocks

TFSA Investors: 1 Stock to Buy With $6,000

| Jared Seguin

For TFSA investors, there are stocks offering long-term value. Find out which TSX stock could generate great total returns today.

Read more »

Dividend Stocks

Want to Be Rich? 3 Cheap Stocks Could Get You There

| Adam Othman

The Bank of Montreal stock, SmartCentres REIT stock, and Nutrien stock can make you a wealthy investor for a bargain.

Read more »

Dividend Stocks

Dividend Investors: Should You Buy Telus (TSX:T) or Royal Bank of Canada (TSX:RY) Stock?

| Andrew Walker

Telus (TSX:T)(NYSE:TU) and Royal Bank (TSX:RY)(NYSE:RY) both provide a 5% dividend yield. Which top stock is a better dividend pick…

Read more »

Bank Stocks

Value Investors: This TSX Real Estate Lender Is Trading at an Attractive Valuation

| Aditya Raghunath

Equitable Group (TSX:EQB) is one cheap bank stock after its 50% decline in 2020.

Read more »

Dividend Stocks

Canada Revenue Agency: This RRSP Mistake Could Cost You Dearly

| Aditya Raghunath

Bank stocks such as BMO have recently plummeted, leaving in their wake an ample supply of generous dividend yields. Here's…

Read more »

Dividend Stocks

TFSA Investors: How to Earn $420 in Monthly Income and Pay Zero Taxes to the CRA

| Aditya Raghunath

Here's why you can look to add BNS stock to your TFSA right now.

Read more »

Dividend Stocks

Coronavirus Canada: Your TFSA Comes in Handy Now

| Kay Ng

Your TFSA can help you now if you're tight for cash. It can also help you to save substantial money…

Read more »

Dividend Stocks

It’s Official: Shopify Is Now Canada’s Amazon

| Chris MacDonald

Shopify (TSX:SHOP)(NYSE:SHOP) is now Canada's Amazon. Read about how coronavirus has changed investors' perception of the company and the road…

Read more »

Dividend Stocks

3 Top Canadian Stocks to Buy With $3,000

| Mat Litalien, MBA

Investing in top Canadian stocks such as Royal Bank of Canada (TSX:RY)(NYSE:RY) is one of safest ways to build wealth…

Read more »

Bank Stocks

CRA Tax Breaks: 2 Perfect Buys

| Amy Legate-Wolfe

There are a number of tax breaks you should be looking out for from the CRA, and here are two…

Read more »

Dividend Stocks

TD (TSX:TD) Is a Screaming Buy Today

| Joey Frenette

TD (TSX:TD)(NYSE:TD) looks like the best bank for your buck, even in the middle of one of the worst crises…

Read more »

Dividend Stocks

Here’s a Better $2,000/Month Than CRA’s CERB

| Kay Ng

The $2,000 per month CERB money from the CRA is temporary. Here’s how you can generate passive income of more…

Read more »

Dividend Stocks

Millennials: Can You Retire Early on Just $500,000?

| Nelson Smith

A $500,000 nest egg will go a lot further if you put to work into excellent dividend stocks. There are…

Read more »

Dividend Stocks

Want $300 for Your Child? The CRA Might Give It to You!

| Christopher Liew, CFA

The one-time CCB enhancement for the benefit year 2020-2021should should ease the financial burden during the pandemic. Parents can also…

Read more »

Dividend Stocks

Is Warren Buffett Getting Ready to Bail on Bank Stocks?

| Andrew Button

With Warren Buffett now selling bank stocks, should you trim your position in banks like Royal Bank of Canada (TSX:RY)(NYSE:RY)?

Read more »

Bank Stocks

How Exposed Are Canada’s Big Banks to the 3 Hardest-Hit Sectors of the Economy?

| Kyle Walton

Retail, energy, and real estate are suffering. Canada’s big banks are not equally well positioned to withstand the fallout.

Read more »

close-up photo of investor Warren Buffett
Dividend Stocks

Warren Buffett Reduces Exposure to the Banking Industry: Should You Exit Canadian Bank Stocks?

| Aditya Raghunath

Is Warren Buffett bearish on bank stocks?

Read more »

Dividend Stocks

CRA Tax Deadline Moved: Time to Add These 2 Tax Deductions

| Adam Othman

Consider investing in the Toronto-Dominion Bank stock as you take advantage of the CRA tax delays.

Read more »

Dividend Stocks

Investors: Are Canadian Banks Still Worthy Investments in the Age of Coronavirus?

| Joey Frenette

The Canadian banks are in a world of pain amid the coronavirus pandemic and although downside risks are high, the…

Read more »

Dividend Stocks

This Is the Biggest Mistake You Need to Avoid in Your TFSA

| Christopher Liew, CFA

The TFSA is a one-of-a-kind wealth builder. You won’t pay taxes by following the rule. Keep a blue-asset like the…

Read more »

Dividend Stocks

3 Top Dividend Stocks for a TFSA Income Fund

| Andrew Walker

Here are three cheap top-quality dividend stocks for a TFSA today.

Read more »

Bank Stocks

Buy Alert: This High-Quality Bank Stock Is Still Down 30%

| Nelson Smith

High quality bank stocks like TD Bank (TSX:TD)(NYSE:TD) are still on sale. What are you waiting for, long-term investors?

Read more »

Dividend Stocks

Bank of Montreal (TSX:BMO) Cratered 42% — Buy the Stock Before it Corrects to the Upside

| Joey Frenette

Bank of Montreal (TSX:BMO)(NYSE:BMO) is a must-buy for value-conscious income investors looking to play a rebound in the hard-hit banking…

Read more »

Bank Stocks

Forget Bank of Nova Scotia: This Stock Can Make You Rich

| Ryan Vanzo

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) stock can only make you rich slowly. This smaller competitor can compound your capital rapidly.

Read more »

Dividend Stocks

Never Mind the CRA: 2 Strong TSX Stocks for a TFSA

| Victoria Hetherington

Here's how names like Scotiabank (TSX:BNS)(NYSE:BNS) can help TFSA investors save tax-free for the long term.

Read more »

Dividend Stocks

Can Canadian Bank Stocks Make You Rich?

| Joey Frenette

Royal Bank of Canada (TSX:RY)(NYSE:RY) is a top Canadian bank that actually looks buyable after the coronavirus market crash.

Read more »

Dividend Stocks

3 Bank Stocks Yielding Well Over 5%

| Karen Thomas, MSc, CFA

Bank stocks have recently plummeted, leaving in their wake an ample supply of generous dividend yields. Here are three top…

Read more »

Dividend Stocks

This Bank Has Immense Growth Potential

| Demetris Afxentiou

Canada's Big Banks hold immense growth potential, but this one bank holds the most opportunity for income and growth-seeking investors…

Read more »

Dividend Stocks

5 Top Stocks for New TSX Investors

| Victoria Hetherington

Here’s why stocks like Shopify (TSX:SHOP)(NYSE:SHOP) are strong long-term buys for new investors looking for long-term wealth creation.

Read more »

Dividend Stocks

Why Did Bank of Nova Scotia (TSX:BNS) Lose 31% Since the Start of 2020?

| Matt Smith

Canadian banks are under pressure, and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is one of the most vulnerable.

Read more »

Dividend Stocks

If You’ve Got $3,000 to Invest, Buy These Dividend Stocks Now

| Kay Ng

Got some extra cash lying around? Get yields of up to 7% in these solid dividend stocks, while you wait…

Read more »

Bank Stocks

TFSA Investors: Now’s the Time to Get Rich

| Amy Legate-Wolfe

Your TFSA is the perfect place to get on the path to riches, but what stocks are the perfect choice…

Read more »

close-up photo of investor Warren Buffett
Dividend Stocks

Have $5,000? Here Are 3 Warren Buffett-Type Stocks to Buy Today

| David Jagielski

Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI) and these two other stocks are greats value stocks investors can build their portfolios around.

Read more »

Dividend Stocks

CRA Tax Adjustment: 2 Big Changes You Need to Know

| Adam Othman

Consider investing in shares of the Scotia bank stock as you learn about two crucial changes made by the CRA.

Read more »

Dividend Stocks

Here’s the Only Reason You Need to Buy TD Bank (TSX:TD) Stock

| Victoria Hetherington

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) has all the hallmarks of a great bank stock. However, there’s one strong reason to buy that…

Read more »

Bank Stocks

Bank of Nova Scotia (TSX:BNS): Should You Buy the Stock for the 7% Dividend Yield?

| Andrew Walker

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) now offers a 7% dividend yield. Is the stock safe to buy today?

Read more »

Dividend Stocks

Retirees: Getting OAS? You May Get an Extra $500!

| Kay Ng

$500 may be coming your way! The coming market dips are a good opportunity to increase your passive income via…

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.