The Best Canadian Bank Stocks to Buy in March 2025

ByDan Kent Published On:

Key takeaways

Stable Dividends and Strong Regulation: Canadian banks, such as RBC, TD, and BMO, are globally recognized for their reliable dividends and resilience, thanks to a well-regulated financial system that minimizes risk.

Growth Beyond Borders: Many Canadian banks, like TD and BMO, are expanding into the U.S. and other international markets, offering diversification and new growth opportunities for investors.

Sector Resilience and Innovation: Despite economic challenges, Canadian banks remain stable, with growing investments in digital banking and wealth management positioning them for long-term success.

3 stocks I like better than the ones on this list.

Whether you’re a seasoned investor or just starting out with buying stocks in Canada, there’s one thing most Canadians agree on when building their portfolios: they almost always include Canadian bank stocks.

Canadian Banks operate in an industry that is heavily regulated and protected from competition. Donald Trump has even expressed his frustration that Canadian Banks are allowed to operate in the United States, but US Banks cannot operate in Canada. This is the exact type of regulation I am speaking about.

Although there are no doubt challenges in the Canadian economy at this point in time, most of these banks are geographically diverse enough, particularly the Big 5, that they should be able to offset struggles in the Canadian economy with international operations.

On the flip side, Canadians remain extremely resilient, and provisions for credit losses seem to be normalizing.

So, what banks are set up best today? I’ll go over that in this article on the best stocks to buy in Canada.

What are the best Canadian bank stocks to own today?

Canada’s leading digital-only bank

Equitable Bank (TSE:EQB)

Equitable Bank, often branded as EQ Bank, operates as Canada’s largest digital-only bank. It offers high-interest savings accounts, mortgages, and other financial products without the overhead of a traditional branch network. Known for its innovation, EQ Bank provides tech-driven financial solutions, appealing to cost-conscious and digitally-savvy customers.

P/E: 10.7

5 Yr Revenue Growth: 20.4%

5 Yr Earnings Growth: 11.1%

5 Yr Dividend Growth: 22%

Yield: 1.7%

  • EQ Bank is expanding its user base as more Canadians adopt online-only banking for convenience and better rates.
  • With no physical branches, Equitable Bank keeps costs low, allowing it to offer attractive rates and maintain strong margins.
  • Equitable’s mortgage book has seen consistent growth, driven by both residential and commercial loans.
  • EQB often trades at a discount to larger traditional banks, despite faster earnings growth.
  • The bank maintains a solid capital buffer, enabling it to withstand economic downturns and continue lending.
  • EQ Bank is increasing its services, including investments and payment solutions, which can drive further growth and customer loyalty.
  • Digital Banking Adoption: The ongoing shift to online banking presents both opportunities and competitive threats for EQ Bank.
  • Interest Rate Environment: Rising or falling rates will directly impact net interest margins and lending profitability.
  • Mortgage Market Conditions: Changes in the Canadian housing market, including demand and price trends, could affect Equitable’s mortgage business.
  • Regulatory Changes: Updates to Canadian banking regulations, particularly around capital requirements or lending practices, could impact Equitable’s growth strategy.
  • Competition from Traditional Banks: Larger banks are enhancing their digital offerings, which could limit EQ Bank’s ability to attract new customers.
  • Economic Slowdown: A recession could lead to higher loan defaults, particularly in the mortgage segment.
  • Interest Rate Sensitivity: Rapid changes in interest rates could pressure margins or slow down mortgage demand.
  • Customer Trust and Technology Risks: As a digital-only bank, EQ relies heavily on technology, making it vulnerable to cyber threats or service outages that could harm its reputation.

Major Canadian bank with strong retail focus

Canadian Imperial Bank of Commerce (TSE:CM)

CIBC provides a broad range of financial services, including personal and business banking, wealth management, and capital markets. Known for its strong retail banking operations in Canada, CIBC also has a growing U.S. presence. The bank’s focus on mortgages and consumer lending makes it a leader in Canadian home financing, while its robust dividend history appeals to income-focused investors.

P/E: 11.9

5 Yr Revenue Growth: 6.2%

5 Yr Earnings Growth: 4.9%

5 Yr Dividend Growth: 4.7%

Yield: 4.2%

  • One of the most attractive dividend yields among major Canadian banks (~6%).
  • Significant exposure to the Canadian housing market.
  • Growing U.S. operations provide diversification outside of Canada.
  • Strong capital position supports steady dividend payouts and buybacks.
  • Digital banking initiatives are enhancing customer experience and operational efficiency.
  • Well-positioned to benefit from rising interest rates through improved net interest margins.
  • Housing Market Trends: CIBC’s mortgage-heavy portfolio ties its performance to Canada’s housing market.
  • U.S. Expansion: The bank’s growth in the U.S. is helping diversify revenue streams.
  • Dividend Stability: Investors should monitor payout ratios and capital levels to ensure dividend sustainability.
  • Digital Banking Growth: Investments in technology are improving customer engagement and reducing costs.
  • Housing Market Exposure: A downturn in the housing market could significantly impact CIBC’s loan portfolio.
  • Competition: Intense competition in Canadian retail banking may pressure margins.
  • Interest Rate Sensitivity: Rising rates could strain borrowers, increasing defaults.
  • Regulatory Risks: Tightening regulations on mortgage lending could limit growth opportunities.

Diversified bank with strong U.S. footprint

Bank of Montreal (TSE:BMO)

Bank of Montreal is one of Canada’s largest and oldest banks, offering personal and commercial banking, wealth management, and capital markets services. BMO is notable for its significant presence in the U.S., particularly in the Midwest, providing a strong growth avenue outside Canada. The bank is also a consistent dividend payer, with one of the longest dividend-paying streaks in Canada.

P/E: 14.5

5 Yr Revenue Growth: 4.3%

5 Yr Earnings Growth: 1.4%

5 Yr Dividend Growth: 8.0%

Yield: 4.4%

  • Strong U.S. operations drive revenue diversification and growth.
  • Reliable dividend payer with a current yield of ~4.5%.
  • Robust wealth management and capital markets divisions.
  • Expanding digital banking capabilities improve customer experience and cost efficiency.
  • Benefiting from rising interest rates through higher net interest margins.
  • Strategic acquisitions, like the Bank of the West deal, enhance U.S. market share.
  • U.S. Expansion: Monitor the integration and performance of the Bank of the West acquisition.
  • Wealth Management Growth: Rising demand for financial advisory services supports this segment.
  • Interest Rate Environment: Higher rates are boosting interest income but could challenge borrowers.
  • Digital Banking Advances: BMO’s investments in AI and digital tools are driving customer engagement.
  • Economic Sensitivity: Exposure to both Canadian and U.S. economies creates vulnerability during slowdowns.
  • Integration Challenges: Large acquisitions like Bank of the West carry integration risks.
  • Regulatory Compliance: Cross-border operations may face complex regulatory requirements.
  • Market Volatility: Capital markets revenue can fluctuate with broader market conditions.

Canada’s 2nd largest bank by total assets

Toronto Dominion Bank (TSE:TD)

TD Bank operates a wide range of financial services, including retail and commercial banking, wealth management, and insurance. It has a strong presence in the U.S., where it operates as one of the top 10 banks, making TD the most U.S.-exposed Canadian bank. TD’s focus on retail banking and customer service, along with its robust balance sheet, ensures consistent performance.

P/E: 16.5

5 Yr Revenue Growth: 6.2%

5 Yr Earnings Growth: -5.9%

5 Yr Dividend Growth: 6.6%

Yield: 5.2%

  • Largest U.S. exposure among Canadian banks, providing diversification and growth.
  • Strong retail banking franchise with a focus on customer service.
  • Reliable dividend yield (~4.4%) with a history of consistent increases.
  • Significant scale advantages as Canada’s largest bank by assets.
  • Rising interest rates boost margins in both Canada and the U.S.
  • Focus on digital banking enhances operational efficiency and customer satisfaction.
  • U.S. Expansion: Track the growth of TD’s U.S. operations and its retail banking footprint.
  • Interest Rate Trends: Rising rates provide opportunities for improved margins on loans.
  • Digital Banking Leadership: TD’s innovation in digital banking is driving competitive advantages.
  • Economic Resilience: Monitor how TD navigates macroeconomic challenges in Canada and the U.S.
  • U.S. Exposure Risks: Greater reliance on the U.S. market creates vulnerability to its economic cycles.
  • Regulatory Challenges: Cross-border operations face complex regulatory landscapes.
  • Market Volatility: TD’s capital markets revenue could suffer in turbulent markets.
  • Housing Market Dependency: Significant exposure to Canadian mortgages poses risks in a downturn.

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Leading regional bank with a focus on Quebec

National Bank (TSE:NA)

National Bank is one of Canada’s smaller major banks, but it has a dominant position in Quebec, offering a full range of financial services. The bank also has a growing presence in wealth management and capital markets. National Bank is known for its strong operational efficiency and focus on digital banking, which helps it punch above its weight in profitability.

P/E: 12.3

5 Yr Revenue Growth: 9.3%

5 Yr Earnings Growth: 11.0%

5 Yr Dividend Growth: 10.2%

Yield: 3.4%

  • Dominant market share in Quebec, offering stable revenue streams.
  • Consistent dividend growth with a current yield of ~4%.
  • Expanding wealth management and capital markets businesses.
  • Superior cost efficiency compared to peers.
  • Smaller size allows for quicker adaptation to market trends.
  • Focus on digital banking strengthens customer retention and reduces costs.
  • Quebec Market Strength: National Bank’s leadership in its home province ensures stable growth.
  • Wealth Management Expansion: Rising demand for investment services supports growth.
  • Digital Transformation: Investments in technology improve efficiency and customer experience.
  • Capital Markets Growth: National Bank’s smaller size allows for agility in capital markets operations.
  • Regional Focus: Heavy reliance on Quebec makes the bank vulnerable to regional economic conditions.
  • Competition: Larger banks with national reach could erode market share.
  • Interest Rate Sensitivity: Higher rates could strain some borrowers in its portfolio.
  • Economic Cycles: A Canadian economic slowdown would disproportionately impact its core market.

Canada’s largest bank by market capitalization

The Royal Bank of Canada (TSX:RY)

Royal Bank of Canada (RBC) is Canada’s largest bank, offering a full suite of financial services, including personal and commercial banking, wealth management, insurance, and investment banking. With a presence in over 30 countries, RBC is a global banking leader, recognized for its consistent profitability and strong dividend growth.

P/E: 14.8

5 Yr Revenue Growth: 4.2%

5 Yr Earnings Growth: 4.7%

5 Yr Dividend Growth: 6.1%

Yield: 3.3%

  • Largest Canadian bank with extensive global operations.
  • Industry-leading dividend yield of ~4%, with a long history of consistent increases.
  • Diversified revenue streams across banking, wealth management, and capital markets.
  • Expanding global presence, particularly in the U.S. and Europe.
  • Significant scale advantages drive profitability and operational efficiency.
  • Strong capital position ensures resilience during economic challenges.
  • Global Expansion: RBC’s international growth strategy offers diversification opportunities.
  • Wealth Management Leadership: Continued growth in this segment drives stable revenue streams.
  • Capital Markets Strength: RBC’s leadership in investment banking supports earnings growth.
  • Digital Innovation: Investments in AI and digital banking keep RBC competitive.
  • Global Exposure Risks: International operations add complexity and exposure to global economic cycles.
  • Regulatory Environment: Stricter banking regulations could increase compliance costs.
  • Market Dependency: RBC’s capital markets revenue is sensitive to global financial conditions.
  • Housing Market Risks: Heavy exposure to Canadian mortgages poses risks during downturns.

Are Canadian banks a good buy now?

Historically there hasn’t really been a “poor” time to buy into these blue-chip big banks or add to your position. Canadian investors witnessed the banks go through a significant bull run in late 2021, primarily because of the rumours of rising interest rates.

We then witnessed them go through one of the harsher drawdowns since the financial crisis as provisions for credit losses spiked, earnings fell, and more uncertainty loomed. So, I guess you could say that near the top in 2021 was a “poor” time to buy them over the short-term, but their rebound in 2024 quickly washed most of the fears away.

Having these stocks in your portfolio has historically provided large-scale benefits. And although nothing is guaranteed in the future, it is a safe bet these institutions will continue to increase profitability.

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How safe are Canadian bank stocks?

The highly regulated Canadian banking market creates massive barriers to entry. This is similar to the Canadian telecom sector.

Most importantly, all 6 Big Banks have diversified product bases, including global banking, global wealth management, small business banking, personal banking, consumer and commercial lending, capital markets, and much more. Not only is their client base focused on Canadian consumers, but institutional clients also.

The Big 5 are incredibly important to the economy in Canada, as are some of the smaller regional players, such as the National Bank of Canada (NA) and Canadian Western Bank (CWB). They deal with wealth management for clients, investment banking, mortgages, personal banking, car loans, and so much more. They are vital to a healthy economy.

A Canadian bank stock can be a cornerstone of one’s portfolio, is low-risk, and provides growth and a steady income to increase your net worth over time.

After weathering the financial crisis better than most all world banks, the banks in Canada were also among the first to reinstate a rising dividend during the COVID-19 pandemic. In fact, the Bank of Montreal has one of the longest consecutive dividend payment streaks in the country, paying dividends since the early 1800s.

Is there an ETF for Canadian bank stocks?

There are a wide variety of ETFs for Canadian bank stocks. If you’re looking for a traditional ETF that holds the Big 6 banks, look at the BMO Equal Weight Banks ETF (ZEB.TO) or Hamilton’s Equal Weight Banking ETF (HEB.TO)

However, if you want an ETF that can provide you with a bit more yield, look to Canadian bank ETFs like BMO Covered Call Canadian Banks ETF (ZWB.TO) or even Canadian Banc Corp (BK.TO).

Which Canadian bank stock pays the highest dividend?

At this point in time, Scotiabank is the highest yielding Canadian bank stock. This title used to be routinely held by Canadian Imperial Bank of Commerce, however due to some significant struggles by Bank of Nova Scotia over the years its price has fallen to the point where it is the highest yielding bank stock.

It is also important to note that TD Bank’s drawdown over the years due to anti-money laundering issues is also resulting in its yield being much higher than historical averages.

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