In this article, we discuss 13 best bank dividend stocks to buy now. You can skip our detailed analysis of the banking sector and the performance of dividend stocks in the past, and go directly to read 5 Best Bank Dividend Stocks To Buy Now.
On March 10, federal regulators seized the assets of the Silicon Valley Bank (SVB), which marked the largest bank failure since the global financial crisis of 2008. The collapse of SVB rattled investors’ confidence, as they started pulling their assets and deposits out of the bank soon after the crisis. According to a report by Bloomberg, top executives at 15 banks lost $267 million in wealth in the span of days following the collapse. The rippling effects of this fallout were felt in Europe as well.
As investors registered their fears regarding the fallout, President Biden assured the nation of the banking system’s safety. He announced that investors will have access to their deposits whenever they need. In a joint statement, Federal Reserve Chair Jerome Powell, Treasury Secretary Janet Yellen, and FDIC Chair Martin Gruenberg also attempted to boost investor confidence by offering loans to banks for up to one year. Here are some comments from the Fed:
“This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy. The Federal Reserve is prepared to address any liquidity pressures that may arise.”
Despite government intervention, bank stocks continue to fall in value. The S&P Banks Select Industry Index declined by 12.88% in the past five days, compared with a 2.28% return of the S&P 500.
Considering this slump in the banking sector, wealth advisors recommend putting money across different asset classes. Patrick Dwyer, managing director at NewEdge Wealth, spoke to CNBC about possible investment strategies to follow. He asserted that investors should put money into Treasuries and money markets as they can offer around 5% risk-free return during elevated interest rate periods. Similarly, Michael Zeuner, managing partner at WE Family Offices, also highlighted the importance of cash in this environment. He mentioned:
“For so many years, cash was just not an interesting investment. It was paying zero, so people weren’t really paying attention to cash. Over the last year, as rates came up, and as the fear of a recession kicked in, a lot of families started to take some risk off the table. It went into cash. And so cash, from an investment perspective, [has] all of a sudden become a much more important part of the portfolio.”
During such economic environments, the main focus of investors is to generate stable and regular income. Investing in dividend stocks is one of the best ways to achieve this goal as these companies reward investors with monthly, quarterly, or annual payouts.
Keeping in mind the current situation of the banking sector, we will discuss the best bank dividend stocks in this article. Some of these companies include JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), and Wells Fargo & Company (NYSE:WFC).
Photo by Sharon McCutcheon on Unsplash
Our Methodology:
For this list, we picked top 13 bank dividend stocks based on their popularity among elite hedge funds. We gauged hedge fund sentiment for these stocks using Insider Monkey’s database of 943 hedge funds. That means these are the best bank dividend stocks according to hedge funds.
Don’t Miss: Bank Stocks With Latest Insider Buying and Selling Activity
13. Canadian Imperial Bank of Commerce (NYSE:CM)
Number of Hedge Fund Holders: 11
Dividend Yield as of March 17: 5.99%
Canadian Imperial Bank of Commerce (NYSE:CM) is a banking and financial services company, based in Canada. RBC Capital raised its price target on the stock to C$70 in February and maintained a Sector Perform rating on the shares, following the company’s recent quarterly earnings.
In fiscal Q1 2023, Canadian Imperial Bank of Commerce (NYSE:CM) reported revenue of nearly C$6 billion, which showed a 7.8% growth from the same period last year. The company’s adjusted net income for the quarter came in at C$1.8 billion, up from C$1.3 billion from the previous quarter.
Canadian Imperial Bank of Commerce (NYSE:CM) currently pays a quarterly dividend of C$0.85 per share. It is one of the best bank dividend stocks on our list as it has raised its payouts for 12 years in a row. The stock has a dividend yield of 5.99%, as of March 17. Other popular bank dividend stocks include JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), and Wells Fargo & Company (NYSE:WFC).
At the end of December 2022, 11 hedge funds tracked by Insider Monkey reported owning stakes in Canadian Imperial Bank of Commerce (NYSE:CM), compared with 12 in the previous quarter. These stakes have a consolidated value of over $95 million. Galibier Capital Management was one of the company’s leading stakeholders in Q4.
12. Bank of Montreal (NYSE:BMO)
Number of Hedge Fund Holders: 12
Dividend Yield as of March 17: 4.81%
Bank of Montreal (NYSE:BMO) is a Canadian multinational investment bank and financial services company. The company reported mixed earnings in fiscal Q1 2023. Its revenue for the quarter came in at C$6.4 billion, which fell by 15.3% from the same period last year. Its adjusted net income came in at $2.27 billion.
On February 18, Bank of Montreal (NYSE:BMO) declared a quarterly dividend of C$1.43 per share, which fell in line with its previous dividend. The company has raised its dividends twice last year. The stock’s dividend yield on March 17 came in at 4.81%. It is among the best bank dividend stocks to buy.
Desjardins lifted its price target on Bank of Montreal (NYSE:BMO) to C$146 in February and maintained a Buy rating on the shares. The firm appreciated the company’s performance over the years.
At the end of Q4 2022, 12 hedge funds tracked by Insider Monkey reported having stakes in Bank of Montreal (NYSE:BMO), up from 9 in the previous quarter. The collective value of these stakes is over $108.8 million. Among these hedge funds, Balyasny Asset Management was one of the company’s leading stakeholders in Q4.
11. The Bank of N.T. Butterfield & Son Limited (NYSE:NTB)
Number of Hedge Fund Holders: 15
Dividend Yield as of March 17: 5.81%
The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) is a Bermuda-based commercial banking company that provides a wide range of financial and banking services to its consumers. The company started its dividend policy in 2016 and has paid regular dividends to shareholders since then. It currently offers a quarterly dividend of $0.44 per share and has a dividend yield of 5.81%, as of March 17.
In the fourth quarter of 2022, The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) reported revenue of $148.5 million, which showed a 16.7% growth from the same period last year. At the end of December 31, the company had over $2.1 billion available in cash and cash equivalents and its total assets amounted to over $14.3 billion.
Wells Fargo raised its price target on The Bank of N.T. Butterfield & Son Limited (NYSE:NTB) to $48 in February and maintained an Overweight rating on the shares. The firm appreciated the company’s balance sheet and capital return.
As of the close of Q4 2022, 15 hedge funds tracked by Insider Monkey owned stakes in The Bank of N.T. Butterfield & Son Limited (NYSE:NTB), the same as in the previous quarter. These stakes have a collective value of over $81.5 million.
10. The PNC Financial Services Group, Inc. (NYSE:PNC)
Number of Hedge Fund Holders: 49
Dividend Yield as of March 17: 4.61%
The PNC Financial Services Group, Inc. (NYSE:PNC) is an American bank holding company that provides financial services to its consumers. In March, Citigroup upgraded the stock to Buy with a $175 price target. The firm highlighted the bank’s clean asset quality and strong deposit base.
The PNC Financial Services Group, Inc. (NYSE:PNC), one of the best bank dividend stocks, currently pays a quarterly dividend of $1.50 per share. The company maintains a 12-year streak of consistent dividend growth. Its dividend yield on March 17 came in at 4.61%.
In the fourth quarter of 2022, The PNC Financial Services Group, Inc. (NYSE:PNC) reported revenue of $5.7 billion, which showed a 12.3% growth from the prior-year period. During the quarter the company returned nearly $600 million to shareholders in dividends.
The number of hedge funds tracked by Insider Monkey owning stakes in The PNC Financial Services Group, Inc. (NYSE:PNC) grew to 49 in Q4 2022, from 43 in the previous quarter. These stakes have a consolidated value of over $742.7 million. Ken Griffin and D. E. Shaw were some of the company’s major stakeholders in Q4.
9. Discover Financial Services (NYSE:DFS)
Number of Hedge Fund Holders: 52
Dividend Yield as of March 17: 2.51%
Discover Financial Services (NYSE:DFS) is an Illinois-based financial services company that also provides digital bank and payment services to its consumers. The company currently offers a quarterly dividend of $0.60 per share for a dividend yield of 2.51%, as of March 17. It has raised its dividends every year since 2011.
In March, BofA upgraded Discover Financial Services (NYSE:DFS) to Neutral with a $107 price target. The firm noted that the company’s shares are closer to fair value amid regional bank failures.
In the fourth quarter of 2022, Discover Financial Services (NYSE:DFS) reported a 20% year-over-year growth in its total loans at $112.1 billion. The company’s revenue for the quarter came in at $3.7 billion, which showed a 27% growth from the same period last year.
Discover Financial Services (NYSE:DFS) was a popular buy among elite funds in Q4 2022, as 52 hedge funds tracked by Insider Monkey reported having stakes in the company, up from 40 in the previous quarter. These stakes have a collective value of over $1.33 billion.
8. The Bank of New York Mellon Corporation (NYSE:BK)
Number of Hedge Fund Holders: 55
Dividend Yield as of March 17: 3.33%
The Bank of New York Mellon Corporation (NYSE:BK) is an American investment banking services holding company, based in New York. In the fourth quarter of 2022, the company reported revenue of $3.9 billion, which fell by 3% from the same period last year. However, its net interest revenue grew by 56% from the prior-year period.
The Bank of New York Mellon Corporation (NYSE:BK), one of the best bank dividend stocks, currently offers a quarterly dividend of $0.37 per share. It has been making regular dividend payments to shareholders for the past 21 years and its payout ratio for Q4 2022 came in at a healthy 60%. The stock’s dividend yield on March 17 came in at 3.33%.
In January, BofA reinstated The Bank of New York Mellon Corporation (NYSE:BK) with a Buy rating and a $56 price target. The firm highlighted the company’s strong management.
At the end of Q4 2022, 55 hedge funds tracked by Insider Monkey reported owning stakes in The Bank of New York Mellon Corporation (NYSE:BK), up from 50 in the previous quarter. The collective value of these stakes is over $3.2 billion. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q4.
7. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 71
Dividend Yield as of March 17: 1.49%
An American financial services company, American Express Company (NYSE:AXP) is next on our list of the best bank dividend stocks to buy now. The company offers credit cards and other banking services to its consumers. Morgan Stanley upgraded the stock to Overweight in February with a $186 price target, calling the stock its new top pick in consumer finance.
On March 9, American Express Company (NYSE:AXP) declared a 15% hike in its quarterly dividend to 0.60 per share. The company is one of the best bank dividend stocks on our list as it has been paying regular dividends to shareholders for the past 30 years. As of March 17, the stock has a dividend yield of 1.49%.
At the end of December 2022, 71 hedge funds tracked by Insider Monkey reported having stakes in American Express Company (NYSE:AXP), up from 68 in the preceding quarter. These stakes are collectively valued at over $26.8 billion. Warren Buffett, Ken Griffin, and D. E. Shaw were some of the company’s leading stakeholders in Q4.
6. The Charles Schwab Corporation (NYSE:SCHW)
Number of Hedge Fund Holders: 74
Dividend Yield as of March 17: 1.73%
The Charles Schwab Corporation (NYSE:SCHW) is a Texas-based financial services company that provides banking and commercial banking services to its consumers. On January 26, the company declared a 13.6% hike in its quarterly dividend to $0.25 per share. It didn’t raise its payouts during the pandemic of 2020 but maintained regular payments through this period. The stock’s dividend yield on March 17 came in at 1.73%. JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), and Wells Fargo & Company (NYSE:WFC) are other bank dividend stocks to consider.
As of the close of Q4 2022, 74 hedge funds in Insider Monkey’s database held investments in The Charles Schwab Corporation (NYSE:SCHW), worth over $8.1 billion collectively.
Baron Funds mentioned The Charles Schwab Corporation (NYSE:SCHW) in its Q4 2022 investor letter. Here is what the firm has to say:
“Shares of online brokerage firm The Charles Schwab Corporation (NYSE:SCHW) rose in the quarter on rising interest rates, which should generate increased profits on Schwab’s more than $600 billion of interest-earning assets. Despite turbulent markets, the company attracted over $400 billion of net new client assets over the past 12 months. In addition to strong organic growth, we believe operating expenses per client assets will drop to record lows once the equity markets improve.”
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Disclosure. None. 13 Best Bank Dividend Stocks To Buy Now is originally published on Insider Monkey.
