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Canadian Bank Stocks: Best Picks & Insights for Investors

Colin Graves Freelance Writer

Updated Mar 27, 2025

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Over the years, Canadian investors have been able to rely on bank stocks to provide consistent returns and solid dividend yields. But in an age when AI-fuelled tech stocks are all the rage, are bank stocks still relevant? Find out why Canadian banks continue to be such a solid long-term investment. 

Best Canadian bank stocks to Invest in

Here is a summary of the Big Six Canadian bank stocks listed alphabetically:

  • Bank of Montreal (BMO.TO)

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    BMO missed earnings estimates in Q4 2024, partly due to an increase in credit loss provisions to cover bad loans. Adjusted earnings per share were $1.90, while analysts had estimated $2.38. This is expected to be a short-term problem, as the bank claims to have improved its credit due diligence.

    In the US, BMO could benefit from Donald Trump’s election victory. It has increased its presence in the US market with its $16.3 billion dollar acquisition of the Bank Of The West and stands to gain if Trump follows through on his promises of decreased regulation and lower corporate tax rates. Dividend growth remains a BMO hallmark, with a 5-year CAGR of 7.73%, above the sector median of 5.67%.

  • CIBC (CM.TO)

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    CIBC’s Q4 2024 results beat analyst estimates, generating $1.91 per share earnings. The bank’s credit quality has improved, and it set less money aside for credit losses than was expected. It remains to be seen if CIBC can continue to build on the momentum in 2025. Regardless, it remains a strong dividend play, with a current yield of 4.12%.

  • National Bank (NA.TO)

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    If you want a secondary Canadian bank stock holding, you may want to consider National Bank. It may be the smallest of the Big Six banks, but it has delivered the highest five-year return, at 122.85%. The bank delivered a $955 million quarterly profit in Q4 2024, up from $751 million in the previous year. Despite a weakening credit picture in 2024, the growth outlook remains positive for the bank in 2025. It has big plans for domestic growth after its proposed $5 billion acquisition of Canadian Western Bank. If the deal is finalized, it will pave the way for National Bank to increase its footprint across western Canada. National Bank stock pays a modest dividend yield of 3.42%.

  • RBC (RY.TO)

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    Despite economic headwinds, Canada’s largest bank has wind in its sails after generating strong 2024 full-year earnings across its business lines. Its Canadian retail operation saw a 9% earnings increase, boosted by RBCs acquisition of HSBC Canada. And its wealth management and insurance divisions had earnings growth of 27% and 33%, respectively.

    Economic uncertainty will carry into 2025, but investors should take comfort in knowing that RBC tends to be a more conservative bank and should exercise caution when managing risk. Its stock has appreciated over 30% in the past year, but analysts rate it as a moderate to strong buy. RBC stock has a dividend yield of 3.34%

  • The Bank of Nova Scotia (BNS.TO)

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    Scotiabank Group’s Q4 revenue and net income increased over the same quarter in 2024. However, its share price dropped immediately after Q4 results were released due to the company missing earnings estimates ($1.57 per share versus $1.60).

    Like BMO, Scotiabank may be positioned to benefit from a Trump presidency in the coming years, given its proposed $2.8 billion investment in Cleveland-based KeyCorp. It’s a move designed to improve shareholder returns. Over the past five years, Scotia’s earnings per share growth of -2.52% has lagged other big banks, beating only TD. Dividend investors may want to consider Scotiabank due to its attractive dividend yield of 5.40%.

  • Toronto Dominion Bank (TD.TO)

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    No other Canadian bank has made more headlines in 2024 than TD. Unfortunately, it was mostly bad news for Canada’s second-largest bank. The bank received a massive $3.09 billion USD fine in October for violating US federal anti-money laundering laws. Additionally, an asset cap was placed on two of its US subsidiaries, limiting the growth potential of the bank’s retail operations south of the border for potentially several years.

    All of this means that TD will have to look to other areas, like wealth management, to grow its US business in the coming years. It must also contend with increased costs as it spends heavily on upgrading its anti-money laundering programs.

    The bottom line is that TD is not an attractive stock in the short term. The company is saying that it expects 2025 to be a year of transition, and it may take much longer to turn things around. If you have a long-term mindset, its stock is relatively cheap and pays the highest dividend yield (5.55%) among the Big Six banks.

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Canadian bank dividend yields

Bank
Dividend yield (%)
BMO 
4.53
CIBC
4.12
National Bank 
3.42
RBC 
3.34
The Bank of Nova Scotia 
5.40
Toronto Dominion Bank
5.55

Comparison of Canadian bank dividends vs. US bank dividends

Generally, Canadian bank stocks pay higher dividend yields than US banks. This is mainly because strict government regulation and limited competition in the Canadian market allow banks to return profits in the form of dividends. The US banking sector is far more competitive and has less regulation. This forces US banks to reinvest more of their earnings towards innovation and future growth. Here is a sampling of a few top Canadian and US banks and their respective dividend yields: 

Bank Return and Yield
🇨🇦 Toronto Dominion Bank 5-year return: 27%
Dividend yield: 5.55%
🇨🇦 Scotiabank 5-year return: 83.60%
Dividend yield: 5.40%
🇨🇦 Bank of Montreal 5-year return: 73.53%
Dividend yield: 4.53%
🇺🇸 JPMorgan Chase 5-year return: 102.20%
Dividend yield: 2.09%
🇺🇸 Wells Fargo 5-year return: 51.33%
Dividend yield: 2.25%
🇺🇸 Bank of America 5-year return: 49.43%
Dividend yield: 2.29%

Note: Return and yield stats are as of January 2025 and will consistently change

Except for TD, which has been weighed down by the negative news surrounding its US anti-money laundering program, Canadian banks have generated strong returns during the past 12 months. Earlier concerns about the potential for high credit losses have subsided as interest rates have fallen in the second half of 2024.  

RBC and National Bank have outperformed and are targeting growth through acquisitions. RBC took over HSBC Canada, and National Bank is in the midst of acquiring Canadian Western Bank. Both moves should help both banks' domestic performance in 2025 and beyond.

In 2025, analysts are cautiously optimistic about the sector’s performance and predict modest earnings growth. Expect RBC to continue outperforming and Bank of Montreal to benefit from its US expansion. Expectations for TD should be muted as it shifts its focus and directs resources toward its anti-money laundering program. It’s also turning over its CEO in 2025, with the retirement of outgoing leader Bharat Masrani. 

Beneath it all, there remains much uncertainty, with the threat of 25% tariffs proposed by Donald Trump looming large.  

Are Canadian bank stocks a good buy right now?

Canadian bank stocks remain a good buy as a long-term investment. Investors benefit from stable long-term performance, attractive dividends and some opportunity for growth. Trailing 12-month P/E ratios are sound, ranging from a low of 12.5x (National Bank) to a high of 16.0x (TD).

TD, in particular, is less attractive over the short term, but remember that its fundamentals remain sound. It’s a well-diversified bank with various levers it can pull to generate earnings growth once it settles its internal issues.

How to invest in Canadian bank stocks

The cheapest and easiest way to purchase Canadian bank stock is through an online brokerage. There are many solid platforms to choose from, but if you’re looking for the lowest cost, you’ll want to consider options such as Wealthsimple, Questrade or Qtrade. 

Wealthsimple, Questrade , Qtrade and NBDB offer commission-free stock trades offers free exchange-traded fund (ETF) purchases for those who prefer to buy the index rather than individual stocks. Most platforms allow you to open accounts online and begin trading shortly after you’ve added funds. 

Should I buy my bank stocks from my bank?

Most banks have quietly phased out or outsourced their direct stock purchase plans (DSPPs). The idea of “buying shares without a brokerage” is mostly a legacy system from when discount brokerages weren’t widespread.

BMO InvestorLine review
CIBC Investor's Edge review
National Bank Direct Brokerage review

The big six banks want you using their brokerages to buy its stock, but many charge you fees to buy said stocks (except for National Bank). The benefits of buying from a bank's brokerage is that you have access to its mutual funds, but it's hard to find mutual fund fees that are lower than the best ETFs for Canadian investors. 

Tip: To make the most of the dividend income earned by your Canadian bank stock, consider opening a tax-advantaged account, such as an RRSP or TFSA.

Thinking of opening an account? Check out our guide to the latest brokerage promotions.  

FAQs

  • Which Canadian bank stock is a good buy?

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    You can argue that any major Canadian bank stock is a good buy over the long term. While I’m not endorsing any particular stock, RBC may be a solid bet if you’re looking for stability. It’s the most profitable bank in Canada and can deliver strong earnings growth across several business channels.

    If you’re looking for a secondary bank holding, National Bank continues to invest in domestic growth through its proposed acquisition of Canadian Western Bank. BMO seems well positioned for growth in the US, with a business-friendly administration that is about to take office.

    Remember that individual stock should always be considered long-term investments, and that past performance is not an indicator of future results.

  • What Canadian bank stock pays the highest dividend?

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    TD pays the highest dividend among the six largest Canadian banks, with a dividend yield of 5.55% at the time of writing.

  • Are Canadian bank stocks still a good investment?

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    Canadian bank stocks have always been considered a good long-term investment. While individual banks will go through rough periods, such as what TD is currently experiencing, due to penalties enforced by US regulators, banks will continue to deliver substantial profits and consistent earnings growth over the long term.

  • Which ETF has Canadian banks?

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    Any broad market index ETF that tracks the S&P/TSX 60 index will include the big Canadian banks among its top holdings. However, you can consider a dedicated bank ETF if you’re looking for more concentrated exposure. For example, the BMO Equal Weight Banks Index ETF (ZEB) holds the six largest Canadian banks, with an equal weighting for each. The fund has a management expense ratio (MER) of 0.28%.

Colin Graves Freelance Writer

Colin Graves is a Winnipeg-based financial writer and editor whose work has been featured in publications such as Time, MoneySense, MapleMoney, Retire Happy, The College Investor, and more. Before becoming a full-time writer, Colin was a bank manager for over 15 years.

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