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.
8. Truist Financial Corporation (NYSE:TFC)
Number of Hedge Fund Holders: 55
Truist Financial Corporation (NYSE:TFC) is a prominent American commercial bank with a strong footprint in the Southeast and Mid-Atlantic regions. Ranking among the top ten banks in the country, it enjoys a solid market position in high-growth states like Florida and Georgia. Recently, the bank has prioritized digital innovation and technology development to improve service delivery and remain competitive against fintech firms.
Regulatory compliance remains a key focus for Truist Financial Corporation (NYSE:TFC), as it operates under enhanced prudential standards and capital requirements as a Category III banking organization. Adhering to these standards is essential for sustaining its operations and long-term strategies. At the same time, Truist’s disciplined approach to capital management allows it to maintain financial stability while pursuing strategic growth opportunities, including potential mergers and acquisitions.
Truist Financial Corporation (NYSE:TFC) is also popular among investors because of its dividend policy. The company has been making regular payments to shareholders since 1997. Currently, it offers a quarterly dividend of $0.52 per share and has a dividend yield of 4.53%, as of September 24.
7. Morgan Stanley (NYSE:MS)
Number of Hedge Fund Holders: 67
Morgan Stanley (NYSE:MS) is a global investment bank with operations in more than 40 countries and a workforce exceeding 80,000 employees. Its operations are divided into three main segments: institutional securities, wealth management, and investment management.
Morgan Stanley (NYSE:MS) was originally part of JPMorgan Chase but separated following the Glass-Steagall Act, which barred a single institution from engaging in both commercial and investment banking. JPMorgan Chase retained the commercial banking operations, while a group of employees left to establish Morgan Stanley, focusing on investment banking. Today, the company’s key activities include providing wealth management services to individuals and institutions, offering investment banking solutions such as capital raising and mergers, and engaging in securities trading across equities and fixed income. In recent years, Morgan Stanley (NYSE:MS)has increasingly emphasized expanding its wealth management platform, integrating technology-driven solutions, and deepening client relationships.
Morgan Stanley (NYSE:MS) is also a solid dividend company, offering regular dividends to shareholders for years. The company currently pays a quarterly dividend of $1.00 per share and has a dividend yield of 2.53%, as of September 24.
6. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 70
American Express Company (NYSE:AXP) is among the oldest bank holding and financial services companies in the US, yet its operations feel modern and tech-driven, appealing strongly to a younger consumer base that could fuel growth for years to come.
A constant for American Express Company (NYSE:AXP) has been its focus on affluent customers. These consumers typically have higher spending power and are more resilient during economic fluctuations. This strategy supports a highly profitable business model: the company collects annual fees on many of its credit cards while offering attractive rewards and perks. These fees contribute significantly to the bottom line and foster customer loyalty, as cardholders tend to renew their accounts year after year.
CEO Stephen Squeri highlighted that American Express Company (NYSE:AXP)’s premium customer base is expanding. Over the past 40 years, the company has built a premium-focused model that is hard to replicate, featuring exclusive benefits such as airport lounges and strong partnerships with luxury brands. This gives the company a competitive advantage in a growing market, and as these customers continue to use its services, the company has significant potential for long-term growth.
In addition, American Express Company (NYSE:AXP)’s dividend history makes it a reliable choice for income investors. The company’s quarterly dividend comes in at $0.82 per share and has a dividend yield of 0.96%, as of September 24.
5. The Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 73
The Goldman Sachs Group, Inc. (NYSE:GS) is an American multinational investment bank and financial services company that offers a wide range of related services and products to its consumers.
The Goldman Sachs Group, Inc. (NYSE:GS) runs its business through three primary segments: Global Banking & Markets, Asset & Wealth Management, and Platform Solutions. Each segment generates revenue from different sources, such as investment banking fees and asset management fees. The firm is heavily involved in market-making and risk management, offering pricing and trading services to clients worldwide across a wide range of products in all major asset classes.
In addition, The Goldman Sachs Group, Inc. (NYSE:GS) focuses on enhancing client experiences and boosting operational efficiency, in part by incorporating advanced technologies like AI. The company holds a strong dividend record, offering regular payouts to shareholders since 1999. Currently, it offers a quarterly dividend of $4.00 per share and has a dividend yield of 2.02%, as of September 24.
4. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 75
Wells Fargo & Company (NYSE:WFC) is a major force in the banking industry, with significant operations in consumer banking, corporate and investment banking, and wealth and investment management. Lately, the bank has prioritized improving its digital services and broadening its consumer offerings. Its success is supported by strong regulatory compliance, disciplined capital and liquidity management, and continuous technological innovation.
Wells Fargo & Company (NYSE:WFC)’s commitment to regulatory adherence is highlighted by the closure of consent orders, reinforcing both operational stability and a key element of its strategic direction.
Wells Fargo & Company (NYSE:WFC) is also a solid dividend company with a stable history. The company currently pays a quarterly dividend of $0.45 per share and has a dividend yield of 2.14%, as of September 24. WFC has paid regular dividends to shareholders since 1988.
3. The Charles Schwab Corporation (NYSE:SCHW)
Number of Hedge Fund Holders: 100
The Charles Schwab Corporation (NYSE:SCHW) is a leading US investment services firm, providing a broad range of financial products and solutions. It leverages its large client base and extensive capabilities to maintain a competitive advantage. Its primary segments include investor services and advisor services, where the firm benefits from its scale and efficient use of resources. Recently, Schwab has emphasized improving operational efficiency and cost management, which support its competitive pricing and strong profit margins.
In Q2 2025, The Charles Schwab Corporation (NYSE:SCHW) achieved record levels in total client assets, revenue, and net income. Total client assets reached $10.76 trillion, marking a 14% year-over-year increase. The firm attracted $80.3 billion in core net new assets, up 31% compared to the prior year, while new brokerage account openings grew 11% year over year, totaling 1.1 million accounts.
The Charles Schwab Corporation (NYSE:SCHW)’s dividend history is also strong, which makes it a reliable option for investors. The company offers a quarterly dividend of $0.27 per share and has a dividend yield of 1.17%, as of September 24. SCHW has maintained its dividends steadily since 1990.
2. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 102
Citigroup Inc. (NYSE:C) is one of the world’s largest financial institutions, offering a wide array of services such as consumer banking, credit, investment banking, and Treasury solutions. Its operations are organized into key segments: Global Consumer Banking, Institutional Clients Group, and Treasury and Trade Solutions. The firm leverages its extensive global presence and broad client network to maintain a competitive advantage.
Recently, Citigroup Inc. (NYSE:C) has focused on digital transformation and enhancing operational efficiency to stay aligned with the evolving financial landscape. Its success relies on effectively navigating economic challenges, ensuring regulatory compliance, managing risks, and investing in technology to improve both customer experience and operational performance.
Citigroup Inc. (NYSE:C) has been distributing regular dividends to shareholders for the past 34 years, which makes it one of the best dividend stocks in the banking sector. The company’s quarterly dividend comes in at $0.60 per share and has a dividend yield of 2.36%, as of September 24.
1. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 124
JPMorgan Chase & Co. (NYSE:JPM) is the largest bank in the US, holding over $4.5 trillion in assets. The bank maintains a conservative 27.2% payout ratio, returning less than a third of its earnings to shareholders while keeping the remainder for growth initiatives and share buybacks.
Over the past five years, JPMorgan Chase & Co. (NYSE:JPM) has delivered 8% annual dividend growth, reflecting CEO Jamie Dimon’s disciplined approach to capital allocation. Trading at roughly 15 times forward earnings, the stock remains one of the most attractively valued among megacap financials. With increasing net interest income from higher rates and a strong balance sheet that consistently passes stress tests, JPMorgan is well-positioned to sustain dividend growth under any economic conditions, making it a solid long-term investment.
JPMorgan Chase & Co. (NYSE:JPM) currently offers a quarterly dividend of $1.50 per share, having raised it by 7.1% hike in September. This was the company’s second dividend hike this year. The stock supports a dividend yield of 1.91%, as of September 24.
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