Updated on June 5th, 2025 by Bob Ciura
The largest Canadian bank stocks have proven over the past decade that they not only endure recessions, but that they can grow at high rates coming out of a recession as well.
Canadian bank stocks also pay higher dividends than many U.S. bank stocks, making them potentially more appealing for income investors.
Valuations have also remained quite low recently, boosting their respective total return profiles as a result.
In this article, we’ll take a look at the “Big 5” Canadian banks – Canadian Imperial Bank of Commerce (CM), Royal Bank of Canada (RY), The Bank of Nova Scotia (BNS), Bank of Montreal (BMO) and Toronto-Dominion Bank (TD) – and rank them in order of highest expected returns.
Note: Canada imposes a 15% dividend withholding tax on U.S. investors. In many cases, investing in Canadian stocks through a U.S. retirement account waives the dividend withholding tax from Canada, but check with your tax preparer or accountant for more on this issue.
The top 5 big banks in Canada are very shareholder-friendly, with attractive cash returns. With this in mind, we created a full list of financial stocks.
You can download the entire list of ~210 financial sector stocks (along with important financial metrics like dividend yields and price-to-earnings ratios) by clicking the link below:
More information can be found in the Sure Analysis Research Database, which ranks stocks based on their dividend yield, earnings-per-share growth potential, and changes in the valuation multiple.
The stocks are listed in order below, with #1 being the most attractive for investors today.
Read on to see which Canadian bank is ranked highest in our Sure Analysis Research Database.
Table Of Contents
You can use the following table of contents to instantly jump to a specific stock:
- Canadian Bank Stock #5: Canadian Imperial Bank of Commerce (CM)
- Canadian Bank Stock #4: Royal Bank of Canada (RY)
- Canadian Bank Stock #3: Bank of Montreal (BMO)
- Canadian Bank Stock #2: Toronto-Dominion Bank (TD)
- Canadian Bank Stock #1: Bank of Nova Scotia (BNS)
The top 5 Canadian bank stocks are ranked based on total expected returns over the next five years, from lowest to highest.
Canadian Bank Stock #5: Canadian Imperial Bank of Commerce (CM)
- 5-year expected returns: 4.5%
Canadian Imperial Bank of Commerce is a global financial institution that provides banking and other financial services to individuals, small businesses, corporations, and institutional clients. CIBC was founded in 1961 and is headquartered in Toronto, Canada.
In addition to trading on the New York Stock Exchange, CM stock trades on the Toronto Stock Exchange, as do the other stocks in this article.
You can download a full list of all TSX 60 stocks below:
CIBC reported its fiscal Q1 2025 earnings results on 5/29/25. For the quarter, the bank’s revenue climbed 14% year-over-year (“YOY”) to C$7.0 billion. Provision for credit losses (“PCL”) was C$605 million, up 18% from a year ago.
The loan loss ratio was 0.33%, up from 0.31% a year ago. And net income came in C$2.0 billion (up 15%) with diluted earnings-per-share (“EPS”) up 14% YOY to C$2.04. Adjusted net income came in 17% higher at C$2.0 billion.
Ultimately, adjusted EPS also climbed 17% to C$2.05. The adjusted return on equity was 13.9%, up from 13.4% a year ago. The bank’s capital position remains solid with a Common Equity Tier 1 ratio of 13.4%, up from 13.1% a year ago. The net interest margin was 1.42% compared to 1.35% a year ago.
Fiscal year to date, revenue climbed 15% YOY to C$14.3 billion, PCL rose 7.2% to C$1.2 billion, while non-interest expense jumped 10% to C$7.7 billion. Ultimately, net income rose 20% to C$4.2 billion, while the adjusted EPS climbed 19% to C$4.25.
Click here to download our most recent Sure Analysis report on CM (preview of page 1 of 3 shown below):
Canadian Bank Stock #4: Royal Bank of Canada (RY)
- 5-year expected returns: 6.5%
The Royal Bank of Canada is the largest bank in Canada by market capitalization, and by total assets. RBC offers banking and financial services to customers primarily in Canada and the U.S.
The financial institution operates in four core business units: Personal & Commercial Banking (39% of FY2023 revenue), Wealth Management (31%), Insurance (10%), and Capital Markets (20%). Its revenue mix is roughly 59% Canada, 25% the U.S., and 16% international.
On 5/29/25, RBC reported strong fiscal Q2 2025 earnings results. The bank has achieved ~85% of annualized targeted cost synergies for the HSBC acquisition and expects to achieve annual cost synergies of C$740 million by March 2026.
Compared to the prior year’s quarter, the bank reported revenue growth of 11% to C$15.7 billion. Management put aside a reserve of C$1.4 billion in the form of provision for credit losses (“PCL”) that dragged down net income. PCL was 55% higher than a year ago. Additionally, non-interest expense rose 5.1% to $8.7 billion.
Net income climbed 11% year-over-year to C$4.4 billion with diluted earnings-per-share (“EPS”) climbing 10% to C$3.02. Adjusted net income came in 8% higher at C$4.5 billion, and its adjusted diluted EPS was C$3.12 (up 6.8%). The bank’s capital position remained solid with a Common Equity Tier 1 ratio at 13.2%, up from 12.8% a year ago.
Click here to download our most recent Sure Analysis report on RY (preview of page 1 of 3 shown below):
Canadian Bank Stock #3: Bank of Montreal (BMO)
- 5-year expected annual returns: 7.0%
Bank of Montreal was formed in 1817, becoming Canada’s first bank. The past two centuries have seen Bank of Montreal grow into a global powerhouse of financial services and today, it has about 2,000 branches (including Bank of the West branches) in North America.
It generates about 45% of earnings from the U.S. (including Bank of the West) and the rest primarily from Canada. Bank of Montreal generates about 64% of its adjusted revenue from Canada and about 36% from the U.S.
Bank of Montreal reported its fiscal Q2 2025 financial results on 5/28/25. For the quarter, compared to a year ago, revenue rose 8.8% to C$8.7 billion, while net income rose 5.1% to C$2.0 billion and diluted earnings per share (“EPS”) rose 5.9% to C$2.50.
Provision for credit losses (“PCL”) jumped 50% to C$1.1 billion, while non-interest expense rose 3.6% to C$5.0 billion. The PCL on impaired loans to average net loans and acceptances was 0.46% for the quarter, up from 0.41% a year ago.
The bank’s common equity tier 1 ratio remained solid at 13.5%, up from 13.1% a year ago. The bank raised its quarterly dividend by 2.5% to C$1.63 per share, which is up 5.2% year over year.
Click here to download our most recent Sure Analysis report on BMO (preview of page 1 of 3 shown below):
Canadian Bank Stock #2: Toronto-Dominion Bank (TD)
- 5-year expected annual returns: 7.6%
Toronto-Dominion Bank traces its lineage back to 1855 when the Bank of Toronto was founded. It is now a major bank with C$1.9 trillion in assets. The bank produces about C$14 billion in annual net income each year.
TD reported fiscal Q2 2025 earnings results on May 22nd, 2025. The bank continues to re-structure its U.S. balance sheet due to the US asset cap imposed on it due to the anti-money-laundering issue. It is cutting its workforce by 2% and buying back its fairly-valued shares.
For the quarter, TD generated adjusted revenue growth of 9.0% to C$15.1 billion. Provision for credit losses (“PCL”) rose 25% to C$1.3 billion. Adjusted net income came in 4.3% lower to C$3.6 billion with the adjusted earnings per share (“EPS”) falling 3.4% to C$1.97. The adjusted return on equity (“ROE”) was 12.3%, down from 14.5% a year ago.
The fiscal year-to-date results provide a bigger picture with the adjusted revenue rising 9.1% to C$30.2 billion and PCL rising 23% to C$2.6 billion. Ultimately, adjusted net income fell 2.4% to C$7.2 billion and the adjusted EPS fell 1.2% to C$3.99.
Click here to download our most recent Sure Analysis report on TD (preview of page 1 of 3 shown below):
Canadian Bank Stock #1: Bank of Nova Scotia (BNS)
- 5-year expected annual returns: 9.9%
Bank of Nova Scotia (often called Scotiabank) is the fourth-largest financial institution in Canada behind the Royal Bank of Canada, the Toronto-Dominion Bank and Bank of Montreal.
Scotiabank reports in four core business segments – Canadian Banking, International Banking, Global Wealth Management, and Global Banking & Markets.
Scotiabank reported fiscal Q2 2025 results on 5/27/25. For the quarter, revenue rose 8.8% year-over-year to C$9.1 billion, while non-interest expenses jumped 8.5% to C$5.1 billion. Provision for credit losses rose by 39% to C$1.4 billion, weighing on earnings. Net income came in C$2 billion, down 2.9% from a year ago.
Ultimately, the diluted earnings per share fell 5.7% to C$1.48. Return on equity was 10.4% compared to 11.2% a year ago. The bank’s PCL as a percentage of average net loans & acceptances was 0.75%, up from 0.54% a year ago, whereas the PCL on impaired loans as a percentage of average net loans & acceptances was 0.57%, up from 0.52% a year ago.
Adjusted net income came in at C$2.1 billion, down 1.6% from a year ago. And adjusted EPS fell 3.8% year over year to C$1.52. Adjusted ROE slipped to 10.4% versus 11.3% a year ago.
Click here to download our most recent Sure Analysis report on BNS (preview of page 1 of 3 shown below):
Final Thoughts
Canadian bank stocks do not get nearly as much coverage as the major U.S. banks. However, income and value investors should pay attention to the big 5 Canadian bank stocks.
Royal Bank of Canada, TD Bank, Bank of Nova Scotia, Bank of Montreal, and Canadian Imperial Bank of Commerce are all highly profitable banks.
And, all 5 have reasonable valuations with dividend yields that are well above the U.S. bank stocks.
The following articles contain stocks with very long dividend or corporate histories, ripe for selection for dividend growth investors:
- The Blue Chip Stocks List: stocks that qualify as Dividend Achievers, Dividend Aristocrats, and/or Dividend Kings
- The High Dividend Stocks List: stocks that appeal to investors interested in the highest yields of 5% or more.
- The Monthly Dividend Stocks List: stocks that pay dividends every month, for 12 dividend payments per year.
- The Dividend Champions List: stocks that have increased their dividends for 25+ consecutive years.
Note: Not all Dividend Champions are Dividend Aristocrats because Dividend Aristocrats have additional requirements like being in The S&P 500. - The Best DRIP Stocks: The top 15 Dividend Aristocrats with no-fee dividend reinvestment plans.
- The Complete List of Russell 2000 Stocks
- The Complete List of NASDAQ-100 Stocks