In this article, we will be looking at the 10 best financial stocks that pay dividends. If you want to skip our detailed analysis of financial stocks, you can go directly to see the 5 Best Financial Stocks that Pay Dividends.
Despite early failings in the start of the year and particularly last year due to the outbreak of the coronavirus pandemic, it can be observed today that the financial sector is beginning to get back on its feet. Just this year, the US S&P 500’s earning growth was able to beat consensus estimates within the financial industry in the first quarter, for instance. Russell Investments has reported that the earnings growth stood at 52% in that quarter, as compared to the 24% consensus estimate figure. As such, financial stocks like Morgan Stanley (NYSE: MS), Bank of America Corporation (NYSE: BAC), JPMorgan Chase & Co. (NYSE: JPM), and The Goldman Sachs Group, Inc. (NYSE: GS) are becoming investor favorites yet again.
As expectations for economic growth in the US resurface, with estimates that there will be a GDP growth of about 7% this year, the financials industry is beginning to secure some breathing room for itself. One major sector within the industry that is visibly benefiting in 2021 and may continue to do so during the latter half of the year is the banking sector. As of this May, about $32 billion were poured into broad financial stocks, for instance, with bank stocks also outperforming the market at large. the KBW Nasdaq Bank Index, for example, was up by 35% as of May 2021, while the S&P 500 has only risen by 10%.
To add to the above, the KBW Nasdaq Regional Banking Index as well was reportedly up by 35% as of May 2021. As such, despite the previous fall in the big-bank index during 2020, a decrease of about 14%, and its underperformance as compared to the S&P 500, in the second half of 2021 financial stocks and banking stocks are beginning to seem more positive and attractive investment options, provided the right ones are picked.
Investing is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Without further ado, let’s look at the 10 best financial stocks that pay dividends.
Insider Monkey tracks the data of 866 hedge funds, which is what we have used to pick out the financial stocks most popular among hedge funds today. We have also taken into account these stocks’ yields, ensuring they are all 2% or above and have considered analysts’ ratings and stock fundamentals while shortlisting these companies.
We have also mentioned the dividend yields and the number of hedge fund holders for each stock added to our list below.
Best Financial Stocks that Pay Dividends
10. The Goldman Sachs Group, Inc. (NYSE: GS)
Number of Hedge Fund Holders: 77
Dividend Yield: 2.1%
The Goldman Sachs Group, Inc. (NYSE: GS), an American multinational investment banking corporation, ranks 10th on our list of the best financial stocks that pay dividends. The company provides a range of investment management, securities, asset management, and related services to consumers across the globe.
Susan Roth Katzke from Credit Suisse this July raised her price target on The Goldman Sachs Group, Inc. (NYSE: GS) from $420 to $425. The analyst also held onto her Outperform rating on the shares.
In the second quarter of 2021, The Goldman Sachs Group, Inc. (NYSE: GS) had an EPS of $15.02, beating estimates by $4.84. The company’s revenue was $15.39 billion, up 15.74% year over year and also beating estimates by $2.99 billion. The Goldman Sachs Group, Inc. (NYSE: GS) has also gained 36.30% in the past 6 months and 41.45% year to date.
By the end of the first quarter of 2021, 77 hedge funds out of the 866 tracked by Insider Monkey held stakes in The Goldman Sachs Group, Inc. (NYSE: GS) worth roughly $5.05 billion. This is compared to 77 hedge funds in the previous quarter with a total stake value of approximately $4.607 billion.
Like Morgan Stanley (NYSE: MS), Bank of America Corporation (NYSE: BAC), and JPMorgan Chase & Co. (NYSE: JPM), The Goldman Sachs Group, Inc. (NYSE: GS) is a good stock to invest in.
Artisan Partners, a high value-added investment management firm, mentioned The Goldman Sachs Group, Inc. (NYSE: GS) in its first-quarter 2021 investor letter. Here’s what they said:
“Financial services firm Goldman Sachs is a best-in-class franchise with a premier brand that attracts top talent and sustains market share across its businesses. We believe this has helped Goldman weather recent market volatility. In addition to de-levering risk-weighted assets, Goldman is also growing its digital investment footprint through the expansion of features on its Marcus Invest platform. The company’s stability—and ability to grow its brand even in tough times—has kept us invested over the long term.”
9. The Blackstone Group Inc. (NYSE: BX)
Number of Hedge Fund Holders: 49
Dividend Yield: 2.8%
The Blackstone Group Inc. (NYSE: BX), a US-based alternative investment management company, is based in New York and converted to a corporation from a publicly-traded partnership in 2019. The company ranks 9th on our list of financial stocks that pay dividends.
Brian Bedell, an analyst at Deutsche Bank, raised the price target on The Blackstone Group Inc. (NYSE: BX) shares this June from $86 to $103. The analyst also has a Hold rating on the company’s shares in light of its Q2 results.
In the second quarter of 2021, The Blackstone Group Inc. (NYSE: BX) had an EPS of $0.82, beating estimates by $0.04. The company’s revenue was $2.12 billion, up 90.29% year over year and also beating estimates by $201.17 million. The Blackstone Group Inc. (NYSE: BX) has also gained 70.34% in the past 6 months and 81.29% year to date.
By the end of the first quarter of 2021, 49 hedge funds out of the 866 tracked by Insider Monkey held stakes in The Blackstone Group Inc. (NYSE: BX) worth roughly $1.62 billion. This is compared to 54 hedge funds in the previous quarter with a total stake value of approximately $1.45 billion.
Like Morgan Stanley (NYSE: MS), Bank of America Corporation (NYSE: BAC), JPMorgan Chase & Co. (NYSE: JPM), and The Goldman Sachs Group, Inc. (NYSE: GS), Blackstone Group Inc. (NYSE: BX) is a good stock to invest in.
ClearBridge Investments, an investment management firm, mentioned The Blackstone Group Inc. (NYSE: BX) in its second-quarter 2021 investor letter. Here‘s what they said:
“We funded the shift primarily with trims in Blackstone following big gains in this name. Blackstone is a long-term holding that have been and remain core holdings. During the quarter, however, we took gains and resized the positions to reflect their current risk-reward post strong increases in the stocks.
Blackstone has delivered phenomenal performance for many years but until the last year or two its success went unrewarded by investors. This began to change when it converted from a partnership to a C-corp and was turbocharged in the second quarter as the stock became eligible for inclusion in broad market indexes, which will drive greater structural demand for the shares. While we continue to be very constructive on the company and anticipate remaining significant holders for years to come, considering the 50% year-to-date rise in the shares, we shaved down the position.”
8. Apollo Global Management, Inc. (NYSE: APO)
Number of Hedge Fund Holders: 44
Dividend Yield: 3.1%
Apollo Global Management, Inc. (NYSE: APO), a private equity company, operates across the globe in alternative investment management. The company is based in New York and ranks 8th on our list of the best financial stocks that pay dividends.
Citigroup raised its price target on Apollo Global Management, Inc. (NYSE: APO) to $76 this July, while reiterating its Buy rating on the stock as well.
In the first quarter of 2021, Apollo Global Management, Inc. (NYSE: APO) had an EPS of $0.66, beating estimates by $0.08. The company’s revenue was $512.93 million, up 21.69% year over year and also beating estimates by $15.69 million. Apollo Global Management, Inc. (NYSE: APO) has also gained 20.86% in the past 6 months and 24.43% year to date.
By the end of the first quarter of 2021, 44 hedge funds out of the 866 tracked by Insider Monkey held stakes in Apollo Global Management, Inc. (NYSE: APO) worth roughly $2.36 billion. This is compared to 30 hedge funds in the previous quarter with a total stake value of approximately $2.05 billion.
Like Morgan Stanley (NYSE: MS), Bank of America Corporation (NYSE: BAC), JPMorgan Chase & Co. (NYSE: JPM), and The Goldman Sachs Group, Inc. (NYSE: GS), Apollo Global Management, Inc. (NYSE: APO) is a good stock to invest in.
7. KeyCorp (NYSE: KEY)
Number of Hedge Fund Holders: 41
Dividend Yield: 3.82%
KeyCorp (NYSE: KEY) is the bank holding company for KeyBank National Associate and ranks 7th on our list of the best financial stocks that pay dividends.
In July, Citigroup’s Jill Shea took over coverage of KeyCorp (NYSE: KEY) shares with a Neutral rating. Shea has made positive comments on the prospects of regional banks to improve their returns on average tangible common equity as well.
In the second quarter of 2021, KeyCorp (NYSE: KEY) had an EPS of $0.72, beating estimates by $0.18. The company’s revenue was $1.77 billion, up 3.26% year over year and also beating estimates by $40.52 million. KeyCorp (NYSE: KEY) has also gained 11.78% in the past 6 months and 18.85% year to date.
By the end of the first quarter of 2021, 41 hedge funds out of the 866 tracked by Insider Monkey held stakes in KeyCorp (NYSE: KEY) worth roughly $565 million. This is compared to 29 hedge funds in the previous quarter with a total stake value of approximately $317 million.
Like Morgan Stanley (NYSE: MS), Bank of America Corporation (NYSE: BAC), JPMorgan Chase & Co. (NYSE: JPM), and The Goldman Sachs Group, Inc. (NYSE: GS), KeyCorp (NYSE: KEY) is a good stock to invest in.
7. The Bank of Nova Scotia (NYSE: BNS)
Number of Hedge Fund Holders: 19
Dividend Yield: 4.68%
The Bank of Nova Scotia (NYSE: BNS) is a multinational financial services company based in Canada. The company operates as Scotiabank and is among the Big Five banks in Canada, and the third-largest bank in the country based on its deposits and market cap. It ranks 6th on our list of the best financial stocks that pay dividends.
John Aiken, an analyst at Barclays, upgraded The Bank of Nova Scotia (NYSE: BNS) shares this June from Underweight to Equal Weight. Aiken also holds a $69.21 price target on the shares.
In the fiscal second quarter of 2021, The Bank of Nova Scotia (NYSE: BNS) had an EPS of $1.57, beating estimates by $0.12. The company’s revenue was $6.41 billion, up 11.11% year over year but missing estimates by $101.76 million. The Bank of Nova Scotia (NYSE: BNS) has also gained 12.62% in the past 6 months and 15.02% year to date.
By the end of the first quarter of 2021, 19 hedge funds out of the 866 tracked by Insider Monkey held stakes in The Bank of Nova Scotia (NYSE: BNS) worth roughly $239 million. This is compared to 19 hedge funds in the previous quarter with a total stake value of approximately $336 million.
Like Morgan Stanley (NYSE: MS), Bank of America Corporation (NYSE: BAC), JPMorgan Chase & Co. (NYSE: JPM), and The Goldman Sachs Group, Inc. (NYSE: GS), The Bank of Nova Scotia (NYSE: BNS) is a good stock to invest in.
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Disclosure: None. 10 Best Financial Stocks that Pay Dividends is originally published on Insider Monkey.
