We recently published a list of 12 Best Financial Sector Dividend Stocks To Buy Right Now In this article, we are going to take a look at where The Charles Schwab Corporation (NYSE:SCHW) stands against other best financial sector dividend stocks to buy right now.
In 2024, financial stocks have led the market, delivering one of the strongest performances among all sectors. While the broader financial sector is expected to continue its upward trajectory, certain stocks within the group appear even better positioned for growth. The broader market’s financial sector has climbed nearly 30% this year, surpassing the overall market and even outperforming the technology sector, which includes many of the high-profile mega-cap tech stocks. The financial index is up by over 7% since the start of 2025.
The US banking sector continued to expand in the third quarter of 2024, despite sluggish loan growth. The industry saw a 1.4% sequential increase in total assets during the period. Collectively, the 50 largest US banks added $377.22 billion in aggregate assets during the third quarter, with 35 institutions reporting growth, according to data from S&P Global Market Intelligence. This marked a turnaround from the second quarter when the top 50 banks saw a combined decline of $128.01 billion from the first quarter of the year. The report further mentioned that as of September 30, the total assets of the 50 largest US banks stood at $23.985 trillion. Among the 39 banks with assets ranging from $50 billion to $500 billion, 25 recorded an increase in assets during the third quarter.
Financial stocks experienced a sharp and widespread rally following President-elect Donald Trump’s victory in the 2024 presidential election. This surge was largely fueled by market optimism surrounding a potentially more relaxed regulatory environment in 2025, particularly in relation to mergers and acquisitions. In November, the median total return for the 211 banks tracked by S&P Global Market Intelligence climbed to 13.4%, significantly outpacing the broader market’s 5.9% gain.
Another key factor influencing bank performance was the Federal Reserve’s release of parameters for its annual industry stress test. The 2025 test outlined less severe economic shocks than previous years, although it still projected a rise in U.S. unemployment to 10% and a 33% decline in home prices. Compared to prior tests, the latest scenario included milder increases in joblessness and less drastic drops in stock and real estate values. Barclays analyst Jason Goldberg emphasized these adjustments in his report, “2025 Stress Test: Scenarios Easier than Past Two Years.” Meanwhile, Bank of America analyst Ebrahim Poonawala suggested that the test’s reduced stringency and greater predictability could lead banks to hold smaller capital buffers later in the year.
The financial sector is cyclical, meaning its performance is closely tied to the overall health of the economy. The US economy has maintained steady momentum, increasing the likelihood of a “soft landing”—a scenario that would help ease concerns about a potential mild recession that could weigh on financial stocks. According to analysts, a key shift heading into 2025 compared to previous years is the outlook for interest rates. The second half of 2024 marked the start of a new rate cycle, with the Federal Reserve implementing its first rate cut since the early stages of the pandemic. For banks, interest rate changes present both opportunities and challenges. While higher rates can boost net interest margins, rate fluctuations can also impact lending activity and overall profitability.
Investor enthusiasm for financial stocks is on the rise, driven in large part by their appealing dividend payouts. According to a report by Janus Henderson, the financial sector saw headline growth of 7.7% growth in dividend payouts on a YoY basis. The report also mentioned that the industry paid $72 billion in dividends in the third quarter of 2024.
Our Methodology
For this list, we scanned Insider Monkey’s database of 900 hedge funds as of Q3 2024 and identified dividend stocks from the finance sector. These companies offer a wide range of financial services, including banking, insurance, investment management, and financial planning. The stocks mentioned below also offer stable dividend yields. From the resultant list, we picked 12 stocks with the highest number of hedge fund investors and ranked them in ascending order of hedge funds’ sentiment towards them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
Is Charles Schwab Corporation (SCHW) The Best Financial Sector Dividend Stock To Buy Right Now?
A corporate finance professional studying a financial performance chart.
The Charles Schwab Corporation (NYSE:SCHW) is a Texas-based financial services company that offers investing and commercial banking services to its consumers. In the fourth quarter of 2024, the company reported $5.3 billion in revenue, marking a 20% increase from the same period a year earlier. This growth was fueled by higher client activity, with active brokerage accounts rising 5% to 36.5 million, reflecting the company’s ability to attract new clients with its competitive offerings. The ongoing integration of TD Ameritrade further bolstered Schwab’s market position, adding $1.6 trillion in client assets to its platform. Net interest revenue reached $2.53 billion, while asset management and administration fees contributed $1.5 billion.
On January 13, The Charles Schwab Corporation (NYSE:SCHW) launched the Schwab Core Bond ETF, its second actively managed fixed-income ETF. This follows the introduction of the Schwab Ultra-Short Income ETF in August 2024. The new fund provides investors with access to the firm’s portfolio management expertise while benefiting from the flexibility and efficiency of an ETF structure.
The Charles Schwab Corporation (NYSE:SCHW)’s maintained a solid cash position in the latest quarter, closing with over $42 million in cash and cash equivalents, up from $35 million in the prior quarter. On January 29, the company announced an 8% increase in its quarterly dividend, raising it to $0.27 per share. The stock has a dividend yield of 1.34%, as of February 16. It is one of the best dividend stocks on our list as the company has paid regular dividends to shareholders since 1990.
Overall, SCHW ranks 5th on our list of best financial sector dividend stocks to buy right now. While we acknowledge the potential for SCHW as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SCHW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
