In this article, we will take a detailed look at 10 Best Financial Dividend Stocks Insiders are Buying in 2024.
When 2024 started, investors began to look beyond the mega-cap AI tech stocks and started to diversify their portfolios with defensive, income-generating stocks that could be relied upon amid the current inflation storm and overvalued equities. Insider Monkey keenly watches insider trading activity, and earlier this year we saw that insiders began piling into bank stocks. Financials, along with healthcare and industrials, were among the most popular sectors seeing insider buying this year.
What Happens to Bank Stocks When Rates are High?
When rates are high, banks enjoy high net interest income. A detailed report entitled BANKING SECTOR PERFORMANCE DURING TWO PERIODS OF SHARPLY HIGHER INTEREST RATES, published by Federal Deposit Insurance Corporation, took a look at the effects of rate hikes on banks during the rate hike cycles of 2004 and 2022. The research found that banks enjoy major surges in net interest income:
“In 2022, strong loan growth and a sharp rise in interest rates caused median net interest income growth to rise to 10.2 percent, the fourth-largest median net interest income growth since 1984. This growth was nearly double the median growth of 6.1 percent in 2021 and more than double the ten-year average median growth of 3.7 percent. All asset size groups reported robust growth greater than in 2021 and greater than the ten-year average. Only 17.6 percent of banks did not report net interest income growth in 2022. Larger banks had higher net interest income growth likely due to their lower share of longer-term loans with contractual interest rates that did not reprice upward as market interest rates increased.”
Deposit Costs Can Hurt Banks
However, this rise in net interest income comes at a cost. When consumers flock to banks to deposit their funds, banks see a rise in deposit costs spending. Major banks like JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Company (NYSE:WFC), Citigroup Inc. (NYSE:C), despite posting strong quarterly numbers this earnings season, warned that they will face rising deposit costs that could hurt their numbers in the future.
For example, JPMorgan, in its Q1 earnings call, talked about deposit margin compression:
“Payments revenue of $1.9 billion was down 2% year-on-year, driven by lower deposit margins and balances largely offset by fee growth net of higher deposit-related client credits. Expenses of $1.5 billion were up 13% year-on-year, predominantly driven by higher compensation, reflecting an increase in employees, including front office and technology investments, as well as higher volume-related expense. Average deposits were down 3% year-on-year, primarily driven by lower non-operating deposits, and down 1% quarter-on-quarter, reflecting seasonally lower balances. Loans were flat quarter-on-quarter. CNI loans were down 1%, reflecting muted demand for new loans as clients remain cautious, and CRE loans were flat as higher rates continue to have an impact on originations and payoff activity.
Finally, credit costs were a net benefit of $35 million, including a net reserve release of $101 million and net charge-offs of $66 million. Then to complete our lines of business, AWM on Page 7. Asset and Wealth Management reported net income of $1 billion with pre-tax margin of 28%. Revenue of $4.7 billion was down 1% year-on-year. Excluding net investment valuation gains in the prior year, revenue was up 5% driven by higher management fees on strong net inflows and higher average market levels, partially offset by lower NII due to deposit margin compression. Expenses of $3.4 billion were up 11% year-on-year, largely driven by higher compensation, including revenue-related compensation, continued growth in our private banking advisor teams, and the impact of the J.P. Morgan Asset Management China acquisition as well as higher distribution fees.” [read the full earnings call transcript here]
Photo by Ferran Fusalba Roselló on Unsplash
Small banks also take a hit in the commercial real estate segment when rates are high because of their investments in office and retail loans.
Insiders are Buying Bank Stocks
Despite these factors, banks stocks saw a renewed interest from insiders this year. In this article we decided to take a look at some bank and financial sector stocks that pay dividends and have seen insider buying activity recently. For that we used Insider Monkey’s stock screener to first list down all financial dividend stocks with insider buying from corporate officers, executives and directors. From these stocks we chose top companies that saw the biggest insider buying in terms of dollar value. From this dataset we selected 10 stocks with the highest number of hedge fund investors.
Some of the best financial dividend stocks with insider buying activity are:
- Civista Bancshares Inc (NASDAQ:CIVB)
- Blackstone Inc (NYSE:BX)
- Barings BDC Inc (NYSE:BBDC)
- Prospect Capital Corporation (NASDAQ:PSEC)
Read on to see the details of insider buying, dividends and other analysis for each stock.
10. Burke & Herbert Bank & Trust Co (NASDAQ:BHRB)
Number of Hedge Fund Investors: 1
While Virginia-based Burke & Herbert Bank & Trust Co (NASDAQ:BHRB) has a healthy dividend yield (over 4%) and a low PE ratio as of May 13, the stock isn’t very popular among the hedge funds we track. As of the end of 2023, just one hedge fund had stake in Burke & Herbert Bank & Trust Co (NASDAQ:BHRB).
On May 10, Gary L. Hinkle, a director at Burke & Herbert Bank & Trust Co (NASDAQ:BHRB), piled into 1,608 shares of Burke & Herbert Bank & Trust Co (NASDAQ:BHRB) at $49.60 per share. The net worth of this transaction was $79,757. Since this transaction the stock price has gained about 1.95%.
9. Middlefield Banc Corp (NASDAQ:MBCN)
Number of Hedge Fund Investors: 2
Ohio-based Middlefield Banc Corp (NASDAQ:MBCN) has a dividend yield of about 3.5%. On May 9, Jennifer L. Moeller, a director at Middlefield Banc Corp (NASDAQ:MBCN), bought 250 shares of Middlefield Banc at $23.00 per share. The total value of this transaction was about $5,750. On the same day, Thomas M. Wilson, an EVP at Middlefield Banc Corp (NASDAQ:MBCN), piled into 1,000 shares of Middlefield Banc Corp (NASDAQ:MBCN) at $22.38 per share. Since these two transactions, the stock price fell about 1.9%.
8. Citizens & Northern Corporation (NASDAQ:CZNC)
Number of Hedge Fund Investors: 3
Pennsylvania-based banking company Citizens & Northern Corporation (NASDAQ:CZNC) saw insider buying activity earlier this month from three of its directors. On May 8, director Robert G. Loughery bought 94 of Citizens & Northern Corporation (NASDAQ:CZNC) at $17.68 per share. On the same day, Frank G. Pellegrino, another director at Citizens & Northern Corporation (NASDAQ:CZNC), bought 113 shares at a price of $17.68 per share. Since May 8 the stock has gained about 1.8%.
Citizens & Northern has a dividend yield of about 6%. As of the end of the fourth quarter of 2023, just three hedge funds had stakes in Citizens & Northern Corporation (NASDAQ:CZNC).
7. Princeton Bancorp Inc (NASDAQ:BPRN)
Number of Hedge Fund Investors: 4
With a dividend yield of about 3.9% and a PE ratio of 7.49, the New Jersey-based Princeton Bancorp Inc (NASDAQ:BPRN) is one of the best dividend-paying bank stocks that saw insider buying.
On April 30, Martin Tuchman, a director at Princeton Bancorp Inc (NASDAQ:BPRN), bought 2,105 shares at a price of $29.42 per share. Since then the stock has gained about 3% in value.
Insider Monkey’s database of 933 hedge funds shows just four hedge funds had stakes in Princeton Bancorp Inc (NASDAQ:BPRN) as of the end of last year.
6. Brookline Bancorp, Inc. (NASDAQ:BRKL)
Number of Hedge Fund Investors: 9
With a dividend yield of about 6% as of May 13, Boston, Massachusetts-based banking company Brookline Bancorp, Inc. (NASDAQ:BRKL) is one of the best banking and financial stocks that saw insider activity this year. On May 8, Thomas J. Hollister, a director at Brookline Bancorp, Inc. (NASDAQ:BRKL), piled into 2,400 shares of the bank at $8.72 per share. The net worth of this transaction was about $20,928. Since then through May 13, the stock price has gained about 1%.
Of the 933 hedge funds in Insider Monkey’s database of hedge funds, nine hedge funds reported owning stakes in the bank. The biggest stake in Brookline Bancorp, Inc. (NASDAQ:BRKL) belongs to Cliff Asness’s AQR Capital Management, worth about $3.6 million.
5. Prospect Capital Corporation (NASDAQ:PSEC)
Number of Hedge Fund Investors: 12
John F. Barry III, Prospect Capital’s CEO, on May 10 bought 69,082 shares of the company at $5.48 per share. Since this transaction the stock price has gained about 2.1%. The stock has a dividend yield of about 12%.
Insider Monkey’s database of 933 hedge funds shows that 12 hedge funds had stakes in Prospect Capital as of the end of 2023. The most significant stake in the company is owned by Robert B. Gillam’s McKinley Capital Management.
4. Civista Bancshares Inc (NASDAQ:CIVB)
Number of Hedge Fund Investors: 10
On May 8, Michael D. Mulford, a Senior Vice President at Civista Bancshares, Inc., bought 1,000 shares of Civista Bancshares Inc (NASDAQ:CIVB) at $13.97 per share. The total value of this transaction was $13,970. Since then, the Ohio-based banking company’s stock has inched up about 1.7%. It has a dividend yield of about 4.3%.
Insider Monkey’s database of 933 hedge funds shows that 10 hedge funds had stakes in Civista Bancshares Inc (NASDAQ:CIVB) as of the end of last year. Anton Schutz’s Mendon Capital Advisors owns a $3.8 million stake in Civista Bancshares Inc (NASDAQ:CIVB).
3. Peoples Bancorp Inc. (NASDAQ:PEBO)
Number of Hedge Fund Investors: 11
Peoples Bancorp Inc. (NASDAQ:PEBO) is an Ohio-based banking company with a dividend yield of about 5.25%. The stock recently saw insider buying activity earlier this month when Dwight Eric Smith, a director at Peoples Bancorp Inc. (NASDAQ:PEBO), piled into 4,306 shares at a price of $30.00 per share. The net worth of this transaction was $15,001. The transaction took place on May 8. Since this transaction the stock has gained about 0.9%.
A total of 11 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Peoples Bancorp Inc. (NASDAQ:PEBO) as of the end of 2023. The most notable stake in Peoples Bancorp Inc. (NASDAQ:PEBO) is owned by Fred Cummings’ Elizabeth Park Capital Management, worth about $3.7 million.
2. Barings BDC Inc (NYSE:BBDC)
Number of Hedge Fund Investors: 12
Business development company Barings BDC Inc (NYSE:BBDC) is a notable financial stock that saw insider buying activity earlier this month. Steve Byers, a director at Barings BDC Inc (NYSE:BBDC), bought 570 shares of Barings BDC Inc (NYSE:BBDC) at $9.7 per share. The transaction took place on February 28, 2024. Since then through May 13, the stock has gained about 0.8%.
Insider Monkey’s database of 933 hedge funds shows that 12 hedge funds reported having stakes in Barings BDC Inc (NYSE:BBDC) as of the end of 2023. The biggest stake in Barings BDC Inc (NYSE:BBDC) is owned by James Morrow’s Callodine Capital Management, worth $18.3 million.
1. Blackstone Inc (NYSE:BX)
Number of Hedge Fund Investors: 51
Blackstone Inc (NYSE:BX) is one of the best financials stocks with latest insider buying. On May 6, Ruth Porat, a director at Blackstone Inc (NYSE:BX), bought 42,850 shares of Blackstone Inc (NYSE:BX) at $119.58 per share. The total value of this transaction was $33,121. Since then the stock has gained about 1%, as of May 13.
As of the end of the fourth quarter of 2023, 51 hedge funds tracked by Insider Monkey had stakes in Blackstone Inc (NYSE:BX). The biggest stakeholder of Blackstone Inc (NYSE:BX) during this period was Stephen Mandel’s Lone Pine Capital which owns a $290 million stake in Blackstone Inc (NYSE:BX).
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. You can also look at the 13 Best Affordable Stocks Under $40 and the 14 Best Long-Term Dividend Stocks To Buy Now.
