10 Best Bank Stocks with High Dividends

6. Discover Financial Services (NYSE:DFS)

Number of Hedge Fund Holders: 71

Dividend Yield as of August 4: 2.17%

Discover Financial Services (NYSE:DFS) is an American digital banking and payment services company that is also one of the largest card issuers in the US. Earlier this year, Capital One revealed its plan to acquire Discover in a $35.3 billion all-stock deal. Although the acquisition could affect consumers in the future, the deal is not expected to be finalized until later this year or early 2025. Currently, the companies are seeking approval from regulators and shareholders, and the deal is already drawing attention from policymakers across the political spectrum. DFS is up by nearly 15% since the start of 2024, outperforming the broader market that has delivered a 12.7% return this year so far.

Discover Financial Services (NYSE:DFS) reported strong operating performance in the second quarter of 2024, which is mainly shown by its loan growth, margin expansion, and higher non-interest revenue. The company’s total loans in the quarter amounted to over $127.6 billion, up from $118 billion in the same period last year. Its revenue for the quarter came in at $4.5 billion, showing a 17% growth from the prior-year period.

Discover Financial Services (NYSE:DFS) earnings were robust, yet analysts are focusing on the potential merger. Financial experts believe that the merger could be advantageous for both Discover and Capital One as it would increase the competition in the payment processing sector, which is currently dominated by Visa and MasterCard. This heightened competition could lead to better rewards and incentives for consumers, as issuers would need to offer more attractive credit card benefits to stand out.

On July 17, Discover Financial Services (NYSE:DFS) declared a quarterly dividend of $0.70 per share, which was in line with its previous dividend. The company has paid uninterrupted dividends to shareholders since 2007. As of August 4, the stock has a dividend yield of 2.17%.

Discover Financial Services (NYSE:DFS) remained popular among elite funds at the end of Q1 2024 as hedge fund positions in the company jumped to 71, from 43 in the preceding quarter, according to Insider Monkey’s database. The stakes held by these hedge funds have a collective value of over $3.5 billion.