The Amateur Investor: Get to know Canada's Big Six bank stocks
· Toronto Sun
I know: The boring old Canadian bank stock, why bother about that?
Visit asg-reflektory.pl for more information.
I’ll tell you why. While stocks such as Nvidia, Palantir, Tesla, Intel and the like dominate headlines and are always among the most actively traded on the stock market, Canadian banks have quietly delivered exceptional returns to investors over the last 24 months and more, exceeding 80% in some cases through a post-COVID recovery and consistent, dependable dividend increases. Experts say stock in Canada’s Big Six banks should be foundational for any Canadian investor’s portfolio.
Plus, it’s nice to be able to walk into your local bank branch and be addressed as “sir” without the requisite, “You’re making a scene.” (At least in my case.)
The stellar returns are due to a few major factors:
Captive market
Federal regulation prevents foreign competition, protecting the profit margins of the Big Six during periods of economic and geopolitical turbulence like we’re seeing right now.
Tax efficiency
For Canadian bank shares held in a non-registered account, its dividends qualify for the Enhanced Dividend Tax Credit , which can significantly lower your tax rate compared to dividends from foreign banks such as J.P. Morgan or Bank of America because of the U.S.-imposed Withhold Tax, which may be non-recoverable. Canadian dividends are tax-free in a TFSA and tax-deferred in an RRSP until you withdraw.
Consistent dividend growth
Canadian bank stocks feature some of the longest uninterrupted dividend payment streaks in the world. The longest belongs to the Bank of Montreal with its streak dating to 1829.
Stability
Canada’s financial system is much more strictly regulated that of our neighbour to the south. The Office of the Superintendent of Financial Institutions (OSFI) updates capital requirements to ensure Canadian banks are holding enough to weather a serious downturn. So while this means Canadian banks may not grow as aggressively as their American counterparts, they historically avoid catastrophic failures of the kind seen in the U.S.
Now that you know, which bank do you invest in? Different banks do different things and it may be more advantageous to plug your money into one bank instead of another, depending on what you want out of your portfolio. So here’s a look at Canada’s Big Six (in no particular order), how much it costs to invest in them, what they specialize in and what sort of return you might see.
(All figures are from the end of the trading day on Feb. 13.)
Bank of Nova Scotia (BNS)
Share price : $94.38
52-week price range : $62.57 to $106.39
Market cap : $116.35 billion
Quarterly divided per share/yield : $1.10/4.66%
Analyst rating average : Hold
With it’s dividend of $1.10 per share, Bank of Nova Scotia (or Scotiabank) is the bank of choice for the income investor. It’s known as Canada’s most international bank with especially high exposure in Latin America. Scotiabank doesn’t have as much exposure to the Canadian housing market as its peers, which means it is not as at risk should a downturn happen. The international strategy is changing as analysts say the bank wants to focus more on North America, specifically the U.S.
In 2024, Scotiabank invested a 14.9% equity stake in Cleveland-based KeyCorp, a U.S. regional bank. The move, according to CEO Scott Thomson, represented a “cost-effective, low-risk approach to deploying capital into the U.S., while boosting returns for our shareholders.” Thomson, incidentally, just got a significant pay raise for his strategy’s success. Analysts gave Scotiabank an average price target of $111.87.
Canadian Imperial Bank of Commerce (CM)
Share price : $130.86
52-week price range : $76.17 to $143.80
Market cap : $120.97 billion
Quarterly dividend/yield : $1.07/3.27%
Average analyst rating : Buy
The Canadian Imperial Bank of Commerce (CIBC) has never really gotten a lot of love from analysts. It has had its issues over the years, which included multibillion-dollar write-downs following the global financial crisis. But that narrative is changing big time. This isn’t your grandma’s CIBC. The bank has outperformed its peers and blown Q1 expectations out of the water thanks especially to growth in its capital markets segment, which it recorded at $877 million in revenue, up by $258 million or 42% from a year ago. It follows a long streak of improvements that has seen shares move from $48.19 in October 2023 to $130 now. If you plugged in then — and you plugged in big — CIBC has brought you much closer to independent wealth than you were at three years ago.
That said, some analysts say that as the bank most exposed to the Canadian housing market, a downturn could hurt CIBC more than any other Canadian bank. They also say investors plugging in now could be too late to the party as the stock is now considered by some to be overvalued, though the average price target is $150.74. But who knows? One analyst at RBC Capital gave the stock a $215 share price estimate. Dare to dream.
National Bank of Canada (NA)
Share price : $180.57
52-week price range : $106.67 to $193.71
Market cap : $69.92 billion
Quarterly dividend/yield : $1.24/2.75%
Average analyst rating : Buy
National Bank has historically been known as Quebec’s officially unofficial bank and the bank of choice for French-Canadians. But like CIBC, National is trying to flip the script. To expand its presence and market share outside of Quebec, National bought out Canadian Western Bank (CWB) in February 2025 in an all-stock purchase worth somewhere north of about $5 billion. Analysts have mixed feelings about the acquisition. While the buy increased its market share outside of Quebec, particularly out west, a Morningstar equity analyst report suspects National may have paid too much.
Still, National Bank is well-liked thanks to its almost-entirely Canadian operations, low exposure to the berserk housing markets of Vancouver and Toronto and dominance in Quebec. The proof’s in the numbers: National more than doubled its stock price in three years going from $84.97 in October 2023 to $180.57 now. Analysts give it an average price target of $190.99.
RECOMMENDED VIDEO
Bank of Montreal (BMO)
Share price : $186.15
52-week price range : $121.31 to $204.57
Market cap : $131.47 billion
Quarterly dividend/yield : $1.67/3.59%
Average analyst rating : Buy
The Big Six banks all have plenty of history, of course, but Bank of Montreal is Canada’s oldest and has the most. Founded in 1817, Bank of Montreal (BMO), as previously mentioned, has one of the longest uninterrupted dividend payouts in the world dating to 1829.
Of course, BMO is a Canadian institution, but analysts like what it’s doing south of the border with a solid presence in the U.S. Midwest and California after it bought Bank of the West in 2023 from BNP Paribas for $16.3 billion US. The move effectively doubled its U.S. footprint.
BMO is also a savvy asset manager as one of Canada’s largest providers of exchange-traded funds (ETFs, a grouping of securities that allows investors to buy portfolios in one trade) with $ZSP (BMO S&P 500 Index ETF) — a fund that offers retail investors a chance to get into companies such as Nvidia, Microsoft and Apple at low costs and expense ratios — ranking among the best and most popular in the country. Analysts give BMO an estimated price target of $209.64.
Toronto Dominion Bank (TD)
Share price : $128.05
52-week price range : $78.06 to $136.49
Market cap : $214.01 billion
Quarterly dividend/yield : $1.08/3.37%
Average analyst rating : Buy
Toronto Dominion Bank (TD) generated some negative headlines in 2024 after its U.S. subsidiary, the 10th largest bank in that country, pleaded guilty to conspiracy to commit money laundering and conspiracy to violate the Bank Secrecy Act. It agreed to pay more than $3 billion US in criminal and civil penalties as part of a settlement with U.S. authorities. The bad news created a unique buy opportunity for investors with the stock price dipping under $75.
Old news, of course, and TD has cleaned up its act since then with an almost immediate change in leadership and major overhauls to its compliance policy and anti-money laundering systems. But those who saw the opportunity when the stock was down are loving it now with the share price hovering around the $130 mark.
The rebound came quickly with TD selling its 10.1% equity stake in Charles Schwab in February 2025 — giving Canada’s second-biggest bank enough capital to optimize its balance sheet and begin share buybacks. With more than $500 billion in Canadian assets under management and as one of the largest credit-card issuers in Canada and a major bank on the world stage, investors are confident TD will generate solid returns for years to come. Analysts give TD an average price target of $148.15.
Royal Bank of Canada (RY)
Share price : $221.47
52-week price range : $151.25 to $240.34
Market cap : $309.55 billion
Average analyst rating : Strong buy
Warren Buffett believes that if you’re going to invest, you invest in the best. And you may not find better than Royal Bank of Canada.
Royal Bank (RBC) is the alpha dog of Canadian banks — far and away the largest in the country, representing more than 20% of domestic deposits and loans and top-two market share in consumer and commercial banking products.
It’s also one of the largest banks globally with more than 17 million clients in 29 countries and has been considered one of the most consequential banks in the world for some time. Morningstar credits it for what it says is its outsized reach in global capital markets, diverse revenue streams, superior operational efficiency and the 2024 acquisition of HSBC Canada that increased its national market share in deposits, mortgages and commercial loans.
Investors consider RBC a Canadian portfolio keystone with its healthy balance of growth and income and analysts expect it to continue to outperform the TSX index for the long term with an average price estimate of $271 a share.
Disclaimer: The information contained in this column is for informational purposes and is not intended to be investment advice or an offer or recommendation to buy or sell any security. Brian Towie is not a certified financial adviser and encourages readers to do their own diligence before investing their money.