The Best Canadian Bank Stocks to Invest in 2024

Canadian bank stocks, in itself, are a large category. When it comes to investment banking, there are many different financial institutions and financial companies in Canada from which to choose, and it can take time to know which one is the best option, even when looking at key indicators like strong balance sheets. That said, let’s take a look at some of the best Canadian banking stocks to invest in in 2024.

Best Stocks to Choose From for 2024

When you’re considering what to purchase for stocks in 2024, you have plenty of options to choose from. When it comes to choosing one Canadian bank stock, there are also plenty of options out there. That said, some of those stocks are more recommended than others. Let’s take a look at those. It’s important to note that not all of these have large-cap stocks, and all aren't considered to be large banks. 

When you’re choosing which stocks to invest in, you still want to be sure that you’re managing risk. Having a diversified portfolio helps generate income faster and mitigate your losses. Earning interest income, as well as investing in Canada’s banks that pay dividends, can help you navigate the economic downturn and stabilize your earnings since they don’t always raise dividends. Let’s look at how these Canadian bank stocks compare. 

Royal Bank of Canada (TSE: RY)

RBC is one of Canada’s largest banks and is considered to be one of Canada’s top 5 banks. They serve over 20 million customers and have over 100,000 employees worldwide. They offer key segments like bank accounts, credit cards, auto financing, mortgages, loans, investment products, and investment services. They even offer global banking services, global wealth management and home equity financing.

One of the reasons that the RBC stock is so popular among investors is it’s established as a dividend growth stock. Plus, their earnings more than cover their dividend payouts. This is impressive, considering the last few years have been really difficult for bank stocks. With that in mind, here are the specifics of RBC stocks. 

The Royal Bank of Canada has a stock price of around $171.34 with a yearly range of $115.57 - $175.04. They have a market capitalization of 242.46 B Canadian and a P/E ratio of 15.25. Their dividends yearly yield is 3.32%. 

Toronto Dominion Bank (TSE: TD)

TD bank is another one of Canada’s top 5 banks. They were created in 1955 and are headquartered out of Toronto. They were created from a merger of The Dominion Bank, which was founded in 1869, and the Bank of Toronto, which was created in 1855.

TD is actually considered to be a top 10 bank in North America as well as the 23rd largest bank in the world. While they do serve the world, they also have TD Canada Trust, which is the Canadian division of the bank.

This division has over 1,095 branches and serves over 11 million people. They offer many different financial services, including wholesale banking and private banking, as well as financial products and financing options. 

The TD stock market price currently stands at around $78.02 per share. The yearly range is between $73.67 and $87.99. They have a market cap of 136.35 B Canadian with an average volume of 9.56M. Their P/E ratio is 18.41, and the dividend yield is 5.23%.

Manulife Financial (TSE: MFC)

Manulife Financial is not only a financial institution in Canada, but it’s also an insurance provider. They have been around for a long time and were actually founded in 1887. The current services they provide are investments, wealth management, everyday banking, group retirement plans, insurance plans and group benefit plans.

Currently, their core earnings sit at $6.2 Billion annually, with a net income of $7.2 Billion and new business values of $2.1 Billion.

The stock price for Manulife currently sits around $45.50 per share, with a year range from $26.01 to $46.42. They have a market capitalization of 79.70 B Canadian and an average volume of 5.55M. They have a P/E ratio of 16.06 and a dividend yield of 3.52%.

Bank of Montreal (TSE: BMO)

The Bank of Montreal, also referred to as BMO, was founded in 1817 and is Canada’s oldest bank and one of Canada’s top 5 banks. They offer different services, such as chequing accounts, savings accounts, investments, loans, mortgages, indirect lending and more. Currently, they have over 13 million customers, over 900 branches in Canada, and over $1.29 trillion in total assets. With that in mind, this is what their stock looks like:

• Around $131.17 per share
• Yearly range of $107.16 - $133.95
• Market Capitalization of 95.63B Canadian
• Average Volume of 3.77M
• P/E ratio of 15.19
• Dividend yield of 4.73%

Bank of Nova Scotia (TSE: BNS)

The Bank of Nova Scotia, also known as Scotiabank, is one of Canada’s top 5 banks and is headquartered out of Toronto, Ontario. Technically, based on deposits and market capitalization, it’s considered to be the third-largest bank in Canada. It’s even huge in other countries like Latin America. 

 They offer services including loans, lines of credit, credit cards, chequing accounts, savings accounts, mortgages and self-directed investing, mutual funds, and more. They even have investment advisory services. 

Here is the information regarding their stocks.

• The share cost is around $78.41
• The yearly range is $56.83 to $78.58
• Market Cap is 96.80B Canadian
• Average volume is 4.21M
• P/E ratio is 13.81
• Dividend yield is 5.41%

Canadian Western Bank (TSE: CWB)

Canadian Western Bank is a bank headquartered in Edmonton, Alberta. They also operate under CW Financial Group. They were founded in 1988 and have over 2,500 employees with over 11 Billion in revenue in 2023. Like other Canadian banks, they offer a wide variety of services for both Canadian personal and commercial lending. These include:

• Equipment Financing
• Construction Financing
• Commercial real estate financing 
• Real estate construction
• Project financing
• Equipment leasing
• General commercial banking services
• Chequing accounts
• Savings accounts
• Loans
• Mortgages
• Investment products

Here are the details of their stock.

• The share price is around $58.68
• Yearly range is $24.66 - $58.78
• Market Cap is 5.67B Canadian
• Average volume is 271.35K
• P/E ratio is 20.06
• Dividend yield is 2.39%

Laurentian Bank (TSE: LB)

Laurentian Bank is a lesser-known bank in Canada. That said, they mostly do their operations in Quebec. They have commercial and business locations in other provinces, including BC, Alberta, Ontario, and Nova Scotia. They currently have over 2,900 employees and a 2023 revenue of 1.03 billion Canadian dollars.  The specifics of their stock include:

• A share price of around $28.50
• A year range of $24.45 - $29.49
• Market cap of 1.25B Canadian
• Average volume of 273.06K
• P/E ratio  N/A
• Dividend yield of 6.60%

National Bank (TSE: NA)

While the National Bank of Canada isn’t considered to be one of the top 5 banks, it’s actually the sixth-largest bank in Canada. Their headquarters are located in Montreal, and they help well over 2.4 million Canadians. They have over 28,000 employees, a revenue of over $10.7 B Canadian, and have been in operation since 1979. Just like other banks, National Bank offers a wide variety of services. These include retail banking, savings, investments, mortgages, borrowing and insurance. 

Here is the information regarding National Bank stock. 

• The price of stock is around $135.30
• Yearly range is $87.92 -$135.53
• Market Capitalization is 46.06B Canadian
• Average volume is 1.36M
• P/E ratio is 13.30
• Dividend yield is 3.25%

Equitable Bank (TSE: EQB)

One thing you may not know about Equitable Bank is they’re actually Canada’s seventh largest bank. While they specialize in residential mortgages and commercial real estate banking, they offer personal banking services through their online branch, EQ Bank. Just like many other large Canadian banks, Equitable Bank is headquartered out of Toronto, Ontario. They currently employ over 1,700 people and have an annual revenue for 2023 of $976 million. 

The price of Equitable Bank’s stock is around $170.75, with a yearly range of $71.90 - $109.80. They have a market cap of 4.13B Canadian and an average volume of 53.70K. Their dividend yield is 1.88%. Just like the rest of them, this company pays dividends. 

Canadian Imperial Bank of Commerce (TSE: CM)

Another member of Canada’s top 5 banks is the Canadian Imperial Bank of Commerce, also known as CIBC. They’re also headquartered in Toronto, Ontario. They offer personal banking, credit cards, loans, lines of credit, mortgages, investments and US cross-border banking. They were also ranked #1 for small business banking by J.D. Power. 

The specifics of CIBC’s stock include the following:

• The stock price of around $89.72
• A yearly range of $51.60 - $90.57
• A market cap of 84.91B Canadian 
• Average volume of 2.86M
• P/E ratio of 13.02
• Dividend yield of 4.01%

Canadian Bank Stocks and Why They’re Falling

With Canadian bank stocks, there are many reasons why the prices are falling. One of the largest influences is the sentiment on the market. Currently, the sentiment is negative, which is causing a price fall. This sentiment stems from many different factors, including global uncertainties, economic downturns, and regulatory changes. That said, emotional investing can also make a large difference. Investors basing their decisions on fears instead of facts can have a large impact on market prices. 

Other things that are affecting Canadian bank stocks are the rise of fintech companies, consumer preferences, rising interest rates, loan defaults, credit losses and policies from the Bank of Canada. So even though some factors have larger influences than others, there isn’t just one cause. However, this isn’t the first time that the banking sector has faced challenges and had to overcome them. If we take historical averages into account, the banking industry is known for its resiliency. 

Canadian Bank Stock ETFs

When it comes to investing in Canadian banks, stocks aren’t the only option available to you. Another way to invest is through ETFs. What exactly are ETFs, though? Well, ETFs, also referred to as Exchange Traded Funds, are a type of investment fund. Essentially, they track a basket of securities and are made up of stocks, bonds, currencies, debts, futures contracts, and/or commodities.

They’re similar to mutual funds in the sense that they allow you to invest in an already assembled portfolio of securities. Here are some of the best Canadian bank ETFs to invest in. 

BMO Equal Weights Index ETF (ZEB)

This ETF has been around since October 2009. Even though it’s been around for a while, it has always generally performed well. This specific index aims to replicate the performance of the Solactive Equal Weight Canada Banks Index, net of expenses. The nice thing about this index is that each security has equal weight instead of having market capitalization weight. 

BMO Covered Call Canadian Banks EFT (XFN)

This type of EFT is considered to be a medium investment risk. Many Canadian investors choose to purchase this fund because it helps to diversify their portfolio, and this particular fund invests in Canadian bank stocks of major banks, including RBC, TD and Scotiabank. It focuses on monthly cash flow while having the potential for capital gains. Its main objective is to provide a return similar to at least one ETF while mitigating any downside risk.

These are just some of the many reasons why this is a popular investment choice. 

RBC Quant Canadian Bank Leaders (RBNK)

This index seeks to replicate the performance of a Canadian bank stocks portfolio. It is currently seeking to track the Solactive Canada Bank Yield Index. The reason that it appeals so much to investors is that it is ideal for tax-efficient income. It’s also a much simpler way to invest in Canadian banks and makes sense since they have a history of high dividend growth. 

iShares Canadian Financial Monthly Income ETF (FIE)

There are many reasons that investors choose to invest in this EFT. It earns monthly dividend income, it’s a diversified portfolio of the Canadian financial sector, and it seeks to maximize returns and provide a stable stream of monthly cash distributions. It’s also available for registered plans. 

Horizons Big Banks Index ETF (HBG)

This index is one of the top ETFs for Canadian banks. Like many of the other ETFs that we’ve discussed, this ETF offers exposure to a diversified portfolio of shares for Canada’s top banks. The difference between this ETF and the others is that this index focuses on the major players in the banking sector. 

Canadian Bank Stock Dividend Yields

While we’ve discussed many of the top banks in Canada and what it would look like to invest in them, we haven’t talked much about dividend yields. Based on which bank you choose, all of the dividend yields will be different. That said, the two Canadian banks with the most consistent dividend payout ratios are the Bank of Montreal and the Canadian Imperial Bank of Commerce.

When it comes to dividend yields for Canadian banks, having a high share price isn’t always better. Currently, since share prices are so much lower than normal, dividend yields are higher. That said, as share prices increase, which they should as the banking sector recovers, there are large returns to be made by investors. 

The Best Bank to Invest Within Canada

If you look at the list above, you’ll see some of the best bank stocks in Canada to invest in. That said, some of these banks are better than others. Currently, the top 4 would be the Royal Bank of Canada, Bank of Montreal, TD Canada Trust and Canadian Imperial Bank of Commerce.

That said, there can also be arguments as to why National Bank is a good option. However, in terms of growth stocks, EQ Bank could be a good investment as well. 

Canadian Bank Stocks: Is It A Good Idea to Invest in Them in 2024?

Investing is tricky since it’s always difficult to predict the future. That said, Canadian banks have always been a good investment to hold onto. While they do fluctuate, they also have a history of being resilient. That said, investors should consider the fact that the future cost of bank stocks will rely a lot on whether interest rates will be cut this year or not.

This leaves a lot up in the air. However, as we already mentioned, the dividend yields with BMO Bank and CIBC are currently good and a good idea for those who are looking to start investing in banks.      

2024 Bank Stock Prices

For a good portion of 2024, the bank stock prices were falling. However, they took an unexpected turn in 2024. With the unexpected decrease in interest rates, the housing market stabalized which in turn positively affected the best bank stocks in Canada. That said, the Canadian economy still hasn’t fully recovered, so it’s hard to know how long this increase will last. 

In the Canadian stock market, there are always fluctuations since personal and commercial banking is affected by interest rate hikes, falls and other financial factors. When it comes to top Canadian bank stocks themselves, factors are always changing. These include things like current market caps, dividend payout ratios, price-to-book ratios, accounting values, and the stock’s price. Based on where things sit currently, though, those who invested in the big Canadian banks and top bank stocks will see a return on their investment. They’ve established solid earnings growth, which resulted in high dividend yields and higher dividend payments since most stocks had annual dividend increases. They also rival tech stocks and other emerging markets. 

Final Thoughts

Investing in the stock market is difficult, especially for those who don’t have a lot of experience. That said, it’s still very doable. One of the ways that new investors start is by investing in Canadian banks. There are quite a few different bank stocks to choose from, but just like with any investment, it’s important that you make an informed decision before you choose which bank you want to invest in. 

For more conservative investors or those looking for another way to diversify their portfolio, there’s also the option of financial ETFs. These can be invested into registered accounts and can be used to save for retirement or other large investments. Depending on the types of risk you’re willing to take with these, they can have better financial performance.

Since ETFs are a collection of stocks and other securities, they’re another great way to invest in the Canadian banking sector. Whether you choose to invest in ETFs or stocks, though, there are plenty of options to invest in for 2024.