The U.S. stock market performed impressively in the past month as Donald Trump won the U.S. presidential election. Following this, the S&P 500 Index crossed the 6,000 mark for the first time on Nov. 8 and touched a new high of 6,094.55 in yesterday’s trading session.
Despite the impressive run, macroeconomic uncertainties continue to linger, including geopolitical headwinds and global inflationary pressure. Further, the impact of policies to be implemented by the Trump administration is yet to be seen. Amid such a backdrop, keeping an eye on stocks with a regular income stream in the form of dividends is always a safer bet. This is because dividend-paying stocks have a long history of profitability and a robust business model, helping them endure market volatility.
Hence, the investment strategy will help investors generate steady returns. Today we are discussing four finance sector stocks — Raymond James Financial, Inc. RJF, ChoiceOne Financial Services, Inc. COFS, Royal Bank of Canada RY, and Canadian Imperial Bank of Commerce CM — which recently announced dividend hikes.
Currently, the finance sector is in focus as the Federal Reserve has started reducing interest rates since September with two consecutive rate cuts of 50 and 25 basis points (bps). Market participants are expecting one more cut of 25 bps later this month. This, along with solid economic growth, changes in the operating environment and a rise in loan demand, makes finance sector stocks an investor favorite.
The abovementioned finance sector stocks have been increasing quarterly dividends regularly, thus enhancing shareholder value. Also, over the past year, these stocks have recorded solid returns and are trading well above the Zacks Finance sector.
One-Year Price Performance
Zacks Investment Research
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4 Finance Sector Stocks to Watch
Raymond James Financial, Inc., based in St. Petersburg, FL, is an investment bank that offers financial services such as asset management, investments and services, primarily in the United States and Canada. This Zacks Rank #1 (Strong Buy) stock has a market cap of $33.8 billion. Over the past 12 months, the stock has surged 57.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earlier this week, RJF announced a quarterly cash dividend of 50 cents per share, representing a hike of 11.1% from the prior payout. The dividend will be paid out on Jan. 16, 2025, to stockholders of record as of Jan. 2, 2025.
Prior to the raise, the company announced a dividend hike of 7.1% to 45 cents per share in November 2023. Raymond James has announced six dividend hikes in the last five years.
Based on the dividend paid out over the trailing four quarters, the stock has a dividend yield of 1.09% and a five-year annualized dividend growth rate of 18.1%. RJF’s payout ratio is 18% of earnings.
Raymond James Financial Inc. Dividend Yield (TTM)
Zacks Investment Research
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Sparta, MI-based ChoiceOne Financial Services, Inc. has a market cap of $337.79 million. Over the past year, shares of this Zacks Rank #3 (Hold) company have rallied 34.7%.
On Wednesday, COFS announced a dividend of 28 cents per share, marking a hike of 3.7% from the prior payout. The dividend will be paid out on Dec. 31 to stockholders of record as of Dec. 13.
Before the recent hike, the company had announced a dividend hike of 3.8% in November 2023 to 27 cents per share. In the last five years, the company hiked its dividend six times.
Based on the dividend paid out over the trailing four quarters, the stock has a dividend yield of 2.86% and a five-year annualized dividend growth rate of 7.4%. COFS’ payout ratio is 33% of earnings.
ChoiceOne Financial Services Inc. Dividend Yield (TTM)
Zacks Investment Research
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Royal Bank of Canada, headquartered in Toronto, Ontario, offers a range of personal banking, commercial banking, wealth management, insurance and financial services to individual and corporate customers through a network of 1,292 branches in the United States, Canada and 27 other countries. Shares of this Zacks Rank #3 company have gained 40% over the past year. RY has a market cap of $181.1 Billion.
Earlier this week, RY announced a dividend of C$1.48 per share, representing a hike of 4.2% from the prior payout. The dividend will be paid out on Feb. 2, 2025 to stockholders of record as of Jan. 27.
In the last five years, the company has increased its dividend 16 times.
Based on the dividend paid out over the trailing four quarters, the stock has a dividend yield of 3.28%. Further, RY’s payout ratio is 48% of earnings.
Royal Bank of Canada Dividend Yield (TTM)
Zacks Investment Research
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Toronto, Ontario-based Canadian Imperial Bank of Commerce has Personal and Business Banking, Commercial Banking and Wealth Management, and Capital Markets businesses in Canada, the United States and globally. Over the past year, shares of this Zacks Rank #3 company have jumped 56.1%. The company has a market cap of $62.74 billion.
Yesterday, CM announced a dividend of 97 Canadian cents per share, marking a hike of 7.8% from the prior payout. The dividend will be paid out on Jan. 28, 2025, to stockholders on record as of Dec. 27.
Before the latest hike, the company had announced a dividend hike of 3.4% in January to 90 Canadian cents per share. In the last five years, Canadian Imperial Bank has raised its quarterly dividend 15 times.
The stock has a dividend yield of 4.01% and a five-year annualized dividend growth of 5.1%. Further, CM's payout ratio is 51% of earnings at present.
Canadian Imperial Bank of Commerce Dividend Yield (TTM)
Zacks Investment Research
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Parting Thoughts
Investors prefer dividends for several reasons. They significantly improve stock investing profits, reduce overall portfolio risk and carry tax advantages.
However, investors must be cautious during stock selection. Buying stocks solely based on higher dividend yields is not a good idea. Investors must also take into account company fundamentals to find compelling investment opportunities.
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