In this article, we discuss 14 best bank dividend stocks to buy now. You can skip our detailed analysis of the banking sector and the performance of bank stocks, and go directly to read 5 Best Bank Dividend Stocks To Buy Now.
During most of the 2022 market decline, financial stocks were seen as a somewhat secure option. However, things shifted in March due to a crisis in regional banking. Investors got concerned about how much banks might lose because of increasing interest rates, and that changed the view of financial stocks as a safe bet. Amidst these shifts, while the Federal Reserve has been reducing the size of its balance sheet, a significant development has been occurring beneath the surface. Central banks have been actively bolstering support for markets by allowing bank reserves to grow. This expansion in reserves increases the amount of money available for banks to invest in both the markets and the broader economy. This action essentially provides banks with more capital, enabling them to have greater resources to allocate toward investments in financial markets and lending to businesses and individuals.
Research conducted by Matt King, previously a strategist at Citigroup and now leading his independent research firm, Satori Insights, proposes a noteworthy shift in focus. Rather than concentrating on the Federal Reserve's reduction in its overall balance sheet, King highlights the paramount importance of understanding the considerable $500 billion surge in reserves within the U.S. banking system since January. He further mentioned that other major central banks have followed a similar path as the Federal Reserve. Rather than withdrawing approximately $1 trillion in liquidity, as initially expected when they declared a proactive stance against inflation in 2022, these prominent global central banks opted to inject nearly an equivalent sum into the financial system.
On December 14, shares of U.S. banks surged significantly following the Federal Reserve's indication of possible interest rate cuts in 2024. This optimistic signal propelled the sector to reach its highest level since the early part of March. The positive momentum was further fueled by Wells Fargo and BofA Global Research analysts, who responded to the Fed's more accommodative stance by increasing their price targets for various banks within the sector. This shift in sentiment also serves as a reminder of how sensitive financial markets can be to signals from key financial institutions like the Federal Reserve. While the recent positive momentum might paint a hopeful picture, it doesn't overshadow the fact that banking stocks have lagged in terms of growth and returns when compared to the overall market trends. S&P Banks Select Industry Index, which tracks the performance of prominent financial stocks like Wells Fargo & Company (NYSE:WFC), Citigroup Inc. (NYSE:C), and KeyCorp (NYSE:KEY), gained 1.88% so far this year, compared with broader market’s 23.4% rally.
The financial crisis has prompted Wall Street banks to adopt and heavily rely on Artificial Intelligence (AI) to revolutionize the landscape of finance. Among the largest banks in the US, JPMorgan stands out significantly by showcasing its commitment to AI adoption. According to data from Evident, a substantial global advertising push was observed from February through April, with JPMorgan prominently advertising a staggering 3,651 positions directly related to AI. In view of these arguments, we will discuss some of the best dividend stocks from the banking sector.
14 Best Bank Dividend Stocks To Buy Now
A series of ATMs in a row, symbolizing the company's 24/7 banking services.
Our Methodology:
For this list, we picked top 14 bank dividend stocks based on their popularity among elite hedge funds in the third quarter of 2023. We gauged hedge fund sentiment for these stocks using Insider Monkey's database of 910 hedge funds, as of Q3 2023.
Ally Financial Inc. (NYSE:ALLY) is a Michigan-based bank holding company that provides a range of financial products and services primarily to automotive dealers and their customers in the US. It is one of the best dividend stocks on our list as the company has been raising its dividends for six consecutive years. The company offers a quarterly dividend of $0.30 per share and has a dividend yield of 3.44%, as of December 17.
At the end of Q3 2023, 43 hedge funds in Insider Monkey's database reported having stakes in Ally Financial Inc. (NYSE:ALLY), compared with 46 in the previous quarter. The collective value of these stakes is over $1.64 billion. With 29 million shares, Warren Buffett's Berkshire Hathaway was the company's leading stakeholder in Q3.
13. The PNC Financial Services Group, Inc. (NYSE:PNC)
Number of Hedge Fund Holders: 45
The PNC Financial Services Group, Inc. (NYSE:PNC) is an American diversified financial services company that provides various banking and financial services in the US and internationally. The company pays a quarterly dividend of $1.55 per share, having raised it by 3.3% in July this year. This marked its 13th consecutive year of dividend growth, which makes PNC one of the best dividend stocks on our list. As of December 17, the stock has a dividend yield of 4.07%.
As of the close of Q3 2023, 45 hedge funds tracked by Insider Monkey held stakes in The PNC Financial Services Group, Inc. (NYSE:PNC), down from 52 in the preceding quarter. These stakes have a collective value of over $754.5 million.
Discover Financial Services (NYSE:DFS) is an Illinois-based financial services company that also provides online banking services, including savings accounts, checking accounts, certificates of deposit (CDs), and money market accounts. On October 18, the company announced a quarterly dividend of $0.70 per share, which was in line with its previous dividend. The stock has a dividend yield of 2.64%, as of December 17. With a dividend growth streak of 13 years, DFS is one of the best dividend stocks on our list from the banking sector.
The number of hedge funds in Insider Monkey's database owning stakes in Discover Financial Services (NYSE:DFS) grew to 46 in Q3 2023, from 43 in the previous quarter. The total value of these stakes is more than $1.2 billion. Among these hedge funds, Southpoint Capital Advisors was the company's leading stakeholder in Q3.
11. First Citizens BancShares, Inc. (NASDAQ:FCNCA)
Number of Hedge Fund Holders: 46
First Citizens BancShares, Inc. (NASDAQ:FCNCA) is a financial holding company that provides a range of banking services to individuals, businesses, and the commercial sector. On October 26, the company announced that it would significantly increase its dividend by an impressive 118.7%, raising it to $1.64 per share. As of December 17, the stock has a dividend yield of 0.46%.
At the end of September 2023, 46 hedge funds tracked by Insider Monkey owned stakes in First Citizens BancShares, Inc. (NASDAQ:FCNCA), compared with 49 in the preceding quarter. The consolidated value of these stakes is over $2.87 billion.
Truist Financial Corporation (NYSE:TFC) is a North Carolina-based bank holding company that operates across various segments of the banking and financial industry. On October 24, the company declared a quarterly dividend of $0.52 per share, which was in line with its previous dividend. It is one of the best dividend stocks on our list as the company has raised its dividends for eight years in a row. The stock offers a dividend yield of 5.67%, as of December 17.
As of the close of Q3 2023, 47 hedge funds owned stakes in Truist Financial Corporation (NYSE:TFC), growing from 42 in the previous quarter, according to Insider Monkey's database. These stakes are collectively valued at nearly $1 billion. Among these hedge funds, Diamond Hill Capital was the company's leading stakeholder in Q3.
An American financial services company, First Horizon Corporation (NYSE:FHN) is next on our list of the best dividend stocks from the banking sector. The company's current quarterly dividend comes in at $0.15 per share for a dividend yield of 4.35%, as of December 17. It has been making regular dividend payments to shareholders since 1989.
Insider Monkey's database of Q3 2023 showed that 48 hedge funds owned stakes in First Horizon Corporation (NYSE:FHN), compared with 50 a quarter earlier. These stakes have a total value of nearly $800 million. D. E. Shaw and Cliff Asness were the company's most prominent shareholders in the third quarter.
8. The Bank of New York Mellon Corporation (NYSE:BK)
Number of Hedge Fund Holders: 51
The Bank of New York Mellon Corporation (NYSE:BK) is a New York-based financial services company that provides a range of banking services to individuals, businesses, and corporate clients. It is one of the best dividend stocks on our list as the company has been paying uninterrupted dividends to shareholders for the past 21 years. It currently pays a quarterly dividend of $0.42 per share and has a dividend yield of 3.25%, as of December 17.
At the end of the third quarter of 2023, 51 hedge funds tracked by Insider Monkey held stakes in The Bank of New York Mellon Corporation (NYSE:BK), compared with 52 in the previous quarter. The total value of these stakes is over $765.6 million. With over 16.2 million shares, First Eagle Investment Management was the company's leading stakeholder in Q3.
Morgan Stanley (NYSE:MS) is a global financial services firm that operates in various segments of the financial industry. The company declared a quarterly dividend of $0.85 per share on October 18, which was consistent with its previous dividend. As of December 17, the stock has a dividend yield of 3.71%.
The number of hedge funds in Insider Monkey's database owning stakes in Morgan Stanley (NYSE:MS) stood at 59, growing from 54 in the previous quarter. These stakes have a total value of more than $2.5 billion.
An American multinational investment banking company, The Goldman Sachs Group, Inc. (NYSE:GS) ranks sixth on our list of the best dividend stocks. It is one of the best dividend stocks on our list as the company returned nearly $937 million to shareholders through dividends in the most recent quarter. The company currently pays a quarterly dividend of $2.75 per share and has a dividend yield of 2.89%, as of December 17.
At the end of Q3 2023, 68 hedge funds owned stakes in The Goldman Sachs Group, Inc. (NYSE:GS), compared with 70 in the previous quarter, according to Insider Monkey's database. Their collective stake value is over $5.11 billion.
