In this article, we will take a look at some of the best bank dividend stocks.
Those looking for both growth potential and steady payouts might find opportunities in bank stocks. According to a recent Wells Fargo analysis, banks have often performed well after the Federal Reserve starts lowering rates, provided the economy avoids a recession. The Fed began easing again last week, trimming the federal funds rate by 25 basis points, or 0.25%. Wells Fargo pointed out that this outperformance has typically been strongest within the first three months following the initial cut. On top of that, many banks distribute dividends, and such income stocks may draw more attention as yields on cash and fixed-income investments decline, making higher-yielding options appear more appealing.
Matt Quinlan, portfolio manager at Franklin Templeton, highlighted that there are still attractive prospects in the banking sector. He explained that institutions with exposure to capital markets are already seeing benefits from stronger activity. Quinlan also pointed out that banks are likely to gain further as lower rates stimulate business activity. In addition, the industry could see tailwinds from potential deregulation under the Trump administration. As lead manager of the Franklin Equity Income Fund (FISEX), he remarked that the credit side of banks and financial firms remains resilient and should continue to hold up well, while dividend growth across the sector has also been encouraging.
Given this, we will take a look at some of the best dividend stocks in the banking sector.
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Our Methodology
For this list, we picked the top 10 bank dividend stocks based on their popularity among elite hedge funds in the second quarter of 2025. We gauged hedge fund sentiment for these stocks using Insider Monkey’s database of nearly 1,000 hedge funds, as of Q2 2025.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
11. Royal Bank of Canada (NYSE:RY)
Number of Hedge Fund Holders: 28
Royal Bank of Canada (NYSE:RY) is a Canadian financial services company and the largest bank in Canada by market cap. The bank’s operations go well beyond personal banking, with strong performances in commercial banking, wealth management, and capital markets.
The March 2024 purchase of HSBC Canada further cemented its leadership in the Canadian market, broadening both its reach and customer base. Royal Bank of Canada (NYSE:RY) has been consistent in carrying out its strategy, supported by a solid balance sheet, an experienced management team, and a strong presence nationwide. The HSBC Canada deal lifted its net income, and even with higher provisions for potential loan losses, its capital strength remained firm with a 13.2% CET1 ratio. With dependable dividends, diverse revenue sources, and financial resilience, RBC stands out as a long-term investment capable of weathering short-term market swings.
Royal Bank of Canada (NYSE:RY) is one of the best dividend stocks as the company has been growing its payouts for 15 consecutive years. The company currently offers a quarterly dividend of C$1.54 per share and has a dividend yield of 3.03%, as of September 24.
10. U.S. Bancorp (NYSE:USB)
Number of Hedge Fund Holders: 51
U.S. Bancorp (NYSE:USB) operates mainly as a commercial bank, with the bulk of its revenue coming from loans and consumer banking services. Widely recognized as U.S. Bank, it stands out in the industry for its strong profitability, efficiency, and reputation as a reliable dividend payer.
Since it avoids the more unpredictable business of investment banking, U.S. Bancorp (NYSE:USB)’s earnings and revenue are typically steadier than those of many peers. Although much of its income relies on interest, and margins have tightened across the sector recently, the bank’s resilience is well proven. It remained profitable even through the 2008–09 financial crisis and has built a track record of disciplined risk management, making it well-equipped to handle periods of economic stress.
In addition, U.S. Bancorp (NYSE:USB) is also popular among income investors because of its strong dividend history. The company currently offers a quarterly dividend of $0.52 per share, having raised it by 4% in September this year. Through this increase, USB stretched its dividend growth streak to 15 years. The stock has a dividend yield of 4.23%, as of September 24.
9. The Bank of New York Mellon Corporation (NYSE:BK)
Number of Hedge Fund Holders: 55
The Bank of New York Mellon Corporation (NYSE:BK), an American bank holding company with a history spanning over 240 years, has established itself as a trusted provider of innovative financial solutions for businesses, communities, and individuals across the globe.
In its latest quarterly results, The Bank of New York Mellon Corporation (NYSE:BK) reported an increase in average assets, largely attributed to deposit growth. The CET1 ratio stood at 11.5% at the close of the quarter, consistent with the previous period. During the second quarter, BNY Mellon returned $1.2 billion in capital to common shareholders, bringing the year-to-date total payout ratio to 92%.
The Bank of New York Mellon Corporation (NYSE:BK)’s dividend history makes it an appealing option for income investors. The company currently pays a quarterly dividend of $0.53 per share and has a dividend yield of 1.96%, as of September 24. Overall, BK has increased its payouts for 15 years in a row, which makes it one of the best dividend stocks in the banking sector.
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