In this article, we will take a look at the 8 Best Diversified Bank Stocks to Invest in Right Now.
Given their consistent profitability and long-term dividends, banks are considered “certainty assets” in the context of slow global development and mounting volatility, which has caused their value to be reviewed in recent months.
Furthermore, major countries across the globe have been on a rate-hiking cycle since 2022, which has resulted in novel company structures and forms of shareholder rewards. Market analysts have a lot to say about the recent surge in bank stocks. For example, CNBC’s Fast Money panelists recently noted that prominent financial institutions such as Goldman Sachs had just reached all-time highs due to strong earnings and increased market confidence.
Similarly, M&A activity seems to be strong this year, with 72 U.S. banking M&A deals totaling $10.39 billion being disclosed in the first half of 2025. In addition, the number of deals in 2025 is projected to reach its highest level in more than five years.
On the other hand, the banking industry faces immense pressure to compete, especially for smaller and mid-sized banks. To draw and keep clients in a variety of geographic areas, larger national banks make use of their wide branch networks, considerable marketing expenditures, and wider range of products. The emergence of fintechs is another cause for competition. Since they aren’t limited by conventional technology, fintech companies are able to create incredibly flexible and user-friendly digital solutions for particular financial requirements, making it difficult for smaller banks to compete.
Ken Wolter / Shutterstock.com
Our Methodology
For this list, we sifted through financial media reports to determine diversified bank stocks that analysts and investors are bullish on. We then selected the stocks that were the most widely held by hedge funds using Insider Monkey’s database of almost 1000 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).
8. Bank of Montreal (NYSE:BMO)
Number of Hedge Fund Holders: 17
Bank of Montreal (NYSE:BMO) ranks among the best diversified bank stocks to invest in right now. On August 27, BofA Securities reaffirmed its rating at Neutral for Bank of Montreal (NYSE:BMO) but increased its price target from $116 to $128. The analyst report states that the bank’s Common Equity Tier 1 (CET1) ratio, which is higher than its operating aim of 12.5% and the regulatory minimum of 11.5%, stayed unchanged at 13.5%.
During the quarter, Bank of Montreal (NYSE:BMO) repurchased 6 million shares, accounting for approximately 1% of outstanding shares. Moreover, the bank has paid dividends for 53 years in a row, solidifying its reputation for financial stability.
BofA Securities anticipates that the new Normal Course Issuer Bid (NCIB) of 30 million shares announced by management would be finished by the end of fiscal year 2026.
Bank of Montreal (NYSE:BMO) is a Canadian bank that provides numerous financial services to people, corporations, and institutions. It offers products and services in personal banking, commercial banking, wealth management, and investment banking.
7. The Bank of Nova Scotia (NYSE:BNS)
Number of Hedge Fund Holders: 20
The Bank of Nova Scotia (NYSE:BNS) ranks among the best diversified bank stocks to invest in right now. On August 28, UBS maintained its Buy rating on The Bank of Nova Scotia (NYSE:BNS) and boosted its price target from C$88 to C$94 following the bank’s third-quarter earnings beat. Lower provision expenses and pre-tax pre-provision (PTPP) strength across a number of divisions, including Global Banking and Markets, International Banking, and Canadian Banking, fueled earnings growth.
In addition to raising its 2025 EPS forecast for The Bank of Nova Scotia (NYSE:BNS) from $6.85 to $7, UBS also raised its 2026 earnings per share estimate to $7.90 from $7.75. The new model includes lower forward-looking credit costs to reflect stronger consumer credit patterns over UBS’s previous prediction.
Additionally, UBS raised Scotiabank’s revenue outlook, citing modest gains in net interest income and more significant gains in noninterest income.
The Bank of Nova Scotia (NYSE:BNS), commonly referred to as Scotiabank, is a chartered bank in Canada that offers global banking and markets, global wealth management, and banking services.
6. The Toronto-Dominion Bank (NYSE:TD)
Number of Hedge Fund Holders: 23
The Toronto-Dominion Bank (NYSE:TD) ranks among the best diversified bank stocks to invest in right now. On August 13, Desjardins raised its price target for The Toronto-Dominion Bank (NYSE:TD) from C$97 to C$107, upgrading the stock from Hold to Buy. The boost coincides with Desjardins praising the messaging from TD’s management team and highlighting a notable improvement in the bank’s communication over the previous six months.
One of the main reasons for the financial institution’s promising future, according to Desjardins, is TD’s excellent Canadian P&C banking business and substantial deposit base.
The firm also cited TD’s proactive actions leading up to its September investor day, such as selling its Schwab position and repurchasing shares, as justifications for the more optimistic outlook.
Based in Toronto, Ontario, The Toronto-Dominion Bank (NYSE:TD), also referred to as TD Bank Group, is a multinational banking and financial services company that provides wealth management, insurance, personal and business banking, and wholesale banking services.
5. Royal Bank of Canada (NYSE:RY)
Number of Hedge Fund Holders: 28
Royal Bank of Canada (NYSE:RY) ranks among the best diversified bank stocks to invest in right now. On August 14, Barclays maintained its Overweight rating on Royal Bank of Canada (NYSE:RY) shares and increased its price target from C$182 to C$190. Given a decrease in losses on performing loans and an increase in net interest income, the firm estimates that Canadian banks will post better sequential results in Q3.
The firm also predicts that worries about tariffs and mortgage renewals will continue, irrespective of the banks restating their 2025 outlooks.
The Royal Bank of Canada (NYSE:RY), one of Canada’s largest banks by assets, is a multinational financial services company that provides corporate banking, wealth management, insurance, capital markets, and personal and commercial banking. The bank is mostly focused on Canada, while it also operates in the United States and other nations.
4. UBS Group AG (NYSE:UBS)
Number of Hedge Fund Holders: 36
UBS Group AG (NYSE:UBS) ranks among the best diversified bank stocks to invest in right now. On August 14, Deutsche Bank kept its Buy rating on UBS Group AG (NYSE:UBS) and increased its price target from CHF32 to CHF35. In light of UBS’s second-quarter 2025 performance and fresh tailwinds in the capital markets, the research group raised its projections for the bank by an average of about 6%.
According to Deutsche Bank, “it is time to move on” from capital problems, even if the majority of questions during UBS’s 2Q25 conference call continued to be concerned with them.
Although the June proposal confirmed “a likely scenario close to the worst case outcome for UBS,” the firm said it was confident that UBS’s capital-generative business model would allow the bank to boost capital returns and raise capital ratios over the next ten years.
UBS Group AG (NYSE:UBS) is a global financial company that offers its private, corporate, and institutional customers a wide range of banking, capital markets advising, risk management, and multi-asset investing services.
3. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 102
Citigroup Inc. (NYSE:C) ranks among the best diversified bank stocks to invest in right now. On August 22, Citigroup Inc. (NYSE:C) stated that it is looking to redeem $2.5 billion in notes due in 2025 as part of its liability management strategy. This redemption will include $1.75 billion in fixed-rate notes and $750 million in floating-rate notes, featuring a redemption price set at par along with accrued interest.
The company’s financial health was also confirmed by Fitch Ratings, which has maintained Citigroup’s long-term issuer default rating at “A” with a stable outlook.
In a separate vein, the bank is investigating stablecoin custody services as part of its cryptocurrency expansion, joining other significant financial institutions in this attempt. This comes after Washington lawmakers recently passed legislation that makes stablecoins easier to utilize for a range of financial services.
Citigroup Inc. (NYSE:C) provides a wide range of financial services to individuals, organizations, and governments. The bank operates through its Services, Markets, Banking, US Personal Banking, and Wealth sectors.
2. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 115
Bank of America Corporation (NYSE:BAC) ranks among the best diversified bank stocks to invest in right now. Freedom Broker retained its Buy rating on Bank of America Corporation (NYSE:BAC) and boosted its price target from $47 to $56.50 on August 27. The firm cited industry tailwinds as a significant driver supporting the higher valuation, which depends on a forward price-to-earnings ratio of 12.5x and forward earnings per share of $4.50 for the period from Q3 2026 to Q2 2027.
According to Freedom Broker, Bank of America’s second-quarter 2025 results were neutral, with earnings per share somewhat exceeding projections and net revenue slightly falling short of expectations. BofA management reiterated its guidance for net interest income in the fourth quarter of 2025, which Freedom Broker said was consistent with market expectations.
Bank of America Corporation (NYSE:BAC) is a financial holding company that offers a variety of services, including savings accounts, deposits, wealth and cash management, investment funds, online banking, and other financial products.
1. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 124
JPMorgan Chase & Co. (NYSE:JPM) ranks among the best diversified bank stocks to invest in right now. Freedom Broker kept its Hold rating on JPMorgan Chase & Co. (NYSE:JPM) and lifted its price target from $240 to $295 on August 20. The change comes after JPMorgan’s impressive second-quarter 2025 results, in which the company’s earnings per share far surpassed the expectations of the market, even as net revenue fell 11% year-over-year.
Mikhail Paramonov, an analyst at Freedom Broker, claims that the bank’s strong performance in its investment banking segment, reduced provision costs, and one-time tax advantages were the main drivers of its successful performance.
While remaining cautious in light of macroeconomic uncertainties, JPMorgan’s management has slightly increased its 2025 projection for both net interest income and operational expenses.
JPMorgan Chase & Co. (NYSE:JPM) is a multinational financial services company that offers investment banking in addition to consumer and small business financial services. It also offers commercial banking, asset management, and financial transaction processing.
While we acknowledge the potential of JPM to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than JPM and that has 100x upside potential, check out our report about this cheapest AI stock.
READ NEXT: 10 Best Magic Formula Stocks for 2025 and 10 Best Retirement Stocks to Buy According to Hedge Funds.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
