We recently compiled a list of the 10 Best Bank Stocks With High Dividends. In this article, we are going to take a look at where Truist Financial Corporation (NYSE:TFC) stands against the other bank stocks.
In 2023, the US banking industry took a major hit, as Silicon Valley Bank collapsed, followed by the downfall of two other major banks. It was the biggest shake-up the industry had seen since the 2008 financial crisis. Despite the US banking crisis, the past two years have been the best for banks since before the Great Recession. Shocking, right?
Banking Sector Performance 2023
According to McKinsey, banks made $7 trillion in revenue and $1.1 trillion in net income globally during 2023, with a return on tangible equity of 11.7%. They have also strengthened their capital and liquidity, with capital levels at 12.8% and liquidity at 77.2%, both improving from 2022. In fact, banks earned more profit than any other sector worldwide last year. Right now, 14% of banks are making up 80% of the industry’s economic profit, which is a big jump from 11% in 2013. This is nearly five times higher than most other industries, where a few big players usually dominate the performance.
In 2023, global dividends surged to a record $1.66 trillion, marking a 5.0% increase on an underlying basis, according to the Janus Henderson Global Dividend Index. The banking sector played a key role in this growth, delivering record payouts and accounting for half of the global increase in dividends. Higher interest rates allowed many banks to expand their margins, with emerging market banks contributing significantly to this increase – though banks in China didn’t join in the dividend boom.
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Banking Sector in 2024
The banking sector is anticipated to maintain its strong performance this year, with analysts offering an optimistic outlook. On December 4, 2024, Moody’s upgraded the global banking sector from negative to stable. The credit rating giant is positive because G-20 countries are easing up on interest rates and making some monetary adjustments, which should help with the asset quality and liquidity of banks. The economy seems to be stabilizing, and that should help banks recover, especially in terms of deposits. Of course, there are some risks like geopolitical tensions, trade issues, and possible shifts in the US policies under the new president could create uncertainties that might affect the global economy and the banking sector. So, while things are looking better, there is still some uncertainty on the horizon.
Our Methodology
For this article, we used the Finviz stock screener to filter out bank stocks with dividend yields exceeding 3%. We focused on picking stocks with a consistent record of paying dividends, offering dividend growth, and being financially stable to steer clear of yield traps. The list below is ranked in the ascending order of dividend yields, as of December 6. We have also mentioned the number of hedge fund holders in each firm, which was sourced from Insider Monkey’s Q3 2024 database.
At Insider Monkey, we are obsessed with 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)
A closeup view of a hand inserting a credit card into an ATM machine.
Truist Financial Corporation (NYSE:TFC)
Dividend Yield as of December 6: 4.41%
Number of Hedge Fund Holders: 45
Truist Financial Corporation (NYSE:TFC) provides a range of banking and financial services across the Southeastern and Mid-Atlantic US. The company offers several deposit products, lending services, wealth management, insurance, and investment solutions. According to a recent SEC filing in December, Boyer K. David Jr., a director at Truist Financial Corp, sold 4,966 shares of the company’s stock at an average price of $46.203, amounting to about $229,444. After the sale, Boyer still owns 11,245 shares directly and holds another 4,071 shares through a trust.
On a positive note, Truist Financial Corporation (NYSE:TFC) returned $1.2 billion in capital to its shareholders in Q3, which includes a common dividend and the repurchase of $500 million in common stock, as part of the $5 billion repurchase plan approved by the board at the end of June 2024. The company has shelled out dividend payments for 52 consecutive years. Given its solid dividend potential, Truist Financial Corporation (NYSE:TFC) is placed 4th on our list of the best bank stocks.
Beyond rewarding shareholders, Truist is also focused on giving back to the community. The company has rolled out a new initiative, Truist Cares for Western North Carolina, pledging $725 million over the next three years to help the region recover from Hurricane Helene. The funding will go towards supporting small businesses, housing, and infrastructure, with a mix of capital for local businesses, donations from the Truist Foundation, and support from Truist employees. The bank will work closely with local partners and organizations to figure out what the community needs most and tailor its efforts accordingly. The first resources should be available by December 2024.
In Q3 2024, Truist Financial Corporation (NYSE:TFC) saw its best capital markets performance since 2021, with a 79% year-over-year increase in investment banking revenues. The bank reached record highs in areas like equity capital markets and asset securitization, thanks to stronger client relationships and strategic hires. TFC feels that with its strong capital position right now, it is in a great spot to use future earnings and capital gains to drive balance sheet growth and return a substantial amount of capital to shareholders.
During the third quarter of 2024, Harris Associates was the largest stakeholder of Truist Financial Corporation (NYSE:TFC), owning a position worth around $233.5 million. Overall, 45 hedge funds held long positions in the stock.
Overall TFC ranks 4th on our list of the best bank stocks with high dividends. While we acknowledge the potential of TFC as an investment, our conviction lies in the belief that certain 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 TFC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.