In this article, we will take a look at some of the best dividend stocks from the regional banking sector.
The year 2024 proved to be a strong one for major US banks, with the six largest institutions collectively reporting a 20% increase in net profits compared to the previous year, according to FactSet data. This performance ranks among the most successful years for the US banking sector in the past two decades. The industry rebounded significantly following the widely publicized bank failures of 2023, which saw several prominent lenders collapse. Based on Financial Times estimates, trading revenue for the year climbed to $123 billion, reflecting a 10% rise from 2023, while investment banking fees jumped 34% to $36 billion. This surge was driven by a recovery in dealmaking activity later in the year, as more companies moved forward with equity and debt offerings.
Regional banks have been gaining momentum within the banking sector following the regional banking turmoil of spring 2023, which prompted lenders to prioritize liquidity, often at any cost. While their performance was strong relative to the Russell small cap index, it still fell short of the broader market’s full-year return of over 25.02%. Despite the gains in 2024, bank stocks have lagged the broader market over multiple years, creating an attractive investment opportunity at historically low valuations. By the end of the year, the price-to-earnings (P/E) multiples of the Regional Banking Index and Community Bank Index were nearly half that of the broader market’s, highlighting their relative discount.
Moreover, in the fourth quarter of 2024, approximately two-thirds of US regional banks reported higher earnings compared to the previous year. According to S&P Global Market Intelligence, 35 out of 51 banks with assets between $10 billion and $100 billion saw year-over-year growth in earnings per share (EPS) for the fourth quarter, based on financial reports released between January 13 and January 24. In addition, 27 regional banks posted quarter-over-quarter improvements, while 22 recorded EPS gains on both a quarterly and annual basis. Meanwhile, only 11 regional banks experienced EPS declines in both comparisons.
A report from S&P Global Ratings noted that fourth-quarter net income improved due to easing pressures on net interest margins (NIM) and an increase in fee income. For the full year 2024, the net income benefited from reduced provisions and stable fee income, though NIM compression partially offset these gains. Regional banks saw another consecutive increase in net interest income (NII) during the quarter, supported by modest loan growth and an improved NIM. However, for the full year, NII remained under pressure.
The report further mentioned that in the fourth quarter, median NIM rose by 5 basis points to 3.14%, as declining deposit costs outweighed the impact of lower loan yields and asset repricing. The firm anticipates a slight increase in earnings for 2025, driven by the possibility of higher NIMs and a gradual uptick in loan growth.
The banking sector remains a favorite among investors as it ranks among the top two sectors for dividend payments. An S&P Global report estimated that banks worldwide distribute approximately $380 billion in dividends. Given this, we will take a look at some of the best dividend stocks from the regional banking sector.
Our Methodology
For this article, we used a Yahoo Finance screener to identify regional banking companies. From the resultant list, we picked 11 stocks with the highest number of hedge fund investors, as per Insider Monkey’s database of Q4 2024. The stocks are ranked in ascending order of hedge funds’ sentiment towards them.
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).
11. East West Bancorp, Inc. (NASDAQ:EWBC)
Number of Hedge Fund Holders: 33
East West Bancorp, Inc. (NASDAQ:EWBC) is a California-based bank holding company that offers a wide range of commercial, wealth management, and international services. With 98 branches across major metropolitan areas in the US and four locations in Asia facilitating cross-border business, the company leverages its extensive experience in international banking. In addition to serving a high-growth demographic and catering to a lucrative market niche, East West has consistently delivered strong profitability. A comparison with industry peers reveals that the company has maintained superior credit performance over the past decade while outperforming its competitors. In the past 12 months, the stock has surged by nearly 3%.
In the fourth quarter of 2024, East West Bancorp, Inc. (NASDAQ:EWBC) reported revenue of $675.8 million, which showed a 4% growth from the same period last year. The revenue also beat analysts’ estimates by $17.6 million. It also achieved new highs in net income and earnings per share. The company delivered a 17% return on average tangible common equity for its shareholders. Deposits grew by over $7 billion, underscoring the strength of its customer relationships. In addition, fee income increased by 12% year-over-year, reaching a record level, driven by strong contributions from wealth management, lending, and deposit account fees.
With a solid capital foundation and industry-leading profitability, East West Bancorp, Inc. (NASDAQ:EWBC) announced an additional $300 million in share repurchase authorization. On January 27, the company declared a 9.1% hike in its quarterly dividend to $0.60 per share. This marked the company’s seventh consecutive year of dividend growth, which makes EWBC one of the best dividend stocks on our list. The stock has a dividend yield of 3.08%, as of April 3.
10. Fifth Third Bancorp (NASDAQ:FITB)
Number of Hedge Fund Holders: 39
Fifth Third Bancorp (NASDAQ:FITB) is an American diversified financial services company that offers comprehensive banking solutions according to the needs of small businesses, middle-market companies, and large corporations. It is among the select US banks that have repeatedly earned recognition as one of Ethisphere’s World’s Most Ethical Companies.
In the fourth quarter of 2024, Fifth Third Bancorp (NASDAQ:FITB) reported revenue of $2.18 billion, which grew slightly by 0.37% from the same period last year. Its net income available to common shareholders came in at $582 million, up from $492 million in the prior-year period. The company’s continued investment in and execution of its strategic growth priorities have delivered strong results. In the fourth quarter, the total consumer households exceeded 2.5 million, and 21 new branches were opened in high-growth markets. Both the wealth and asset management and capital markets divisions saw double-digit revenue growth compared to the same quarter last year. In addition, commercial payments revenue increased by 7%, contributing to the expansion of new payments-led relationships.
On March 20, Fifth Third Bancorp (NASDAQ:FITB) declared a quarterly dividend of $0.37 per share, which was in line with its previous dividend. Overall, the company has been growing its payouts for 12 consecutive years, which makes FITB one of the best dividend stocks on our list. In addition, it returned $1.6 billion to shareholders in FY24. The stock supports a dividend yield of 4.17%, as of April 3.
9. KeyCorp (NYSE:KEY)
Number of Hedge Fund Holders: 43
An American retail banking company, KeyCorp (NYSE:KEY) ranks ninth on our list of the best dividend stocks. The bank offers a wide range of retail and commercial banking services to its consumers. The company has been adopting a more balanced growth strategy in consumer banking, supported by the expansion of its digital banking capabilities. A strategic investment from Scotiabank has provided a significant growth opportunity while reinforcing financial stability. This capital infusion strengthens the company’s financial flexibility, enabling it to advance key strategic priorities, particularly the realignment of its securities portfolio.
In the fourth quarter of 2024, KeyCorp (NYSE:KEY)’s earnings per share and revenue reflected the impact of its previously announced securities portfolio repositioning. However, on an adjusted basis, revenue grew 16% year-over-year and 11% sequentially. Net interest income increased by 10% compared to the previous quarter, while adjusted fees recorded a notable rise over the same period. The company delivered positive operating leverage for the second consecutive quarter on a year-over-year basis. In addition, net charge-offs declined by 26% from the prior quarter, and criticized loans were reduced by 7%.
KeyCorp (NYSE:KEY) currently offers a quarterly dividend of $0.205 per share and has a dividend yield of 5.81%, as of April 3. The company is a reliable dividend payer as it has never missed a dividend since 1985.
8. Citizens Financial Group, Inc. (NYSE:CFG)
Number of Hedge Fund Holders: 43
Citizens Financial Group, Inc. (NYSE:CFG) is a Rhode Island-based bank holding company. It is a sizable regional bank serving the northeastern US, with a presence spanning over 1,000 retail branches across 14 states and total assets exceeding $217 billion. While its operating costs are higher than those of online-only banks, the company has maintained a strong track record in lending, effectively managing risk and generating solid returns. In addition, it has demonstrated operational strength, positioning itself as a reliable player in the regional banking sector.
Citizens Financial Group, Inc. (NYSE:CFG) generated $1.986 billion in revenue in the fourth quarter of 2024, which fell slightly by 0.1% from the same period last year. However, the revenue surpassed analysts’ estimates by $26.79 million. The company’s net income of $401 million grew significantly from $189 million in the prior-year period. The Private Bank closed the year with $7 billion in deposits, $3.1 billion in loans, and $4.7 billion in assets under management, showing strong progress toward its set targets.
Citizens Financial Group, Inc. (NYSE:CFG)’s balance sheet remained strong with a CET1 ratio of 10.8%, as of December 2024, compared with 10.6% a year ago. Due to this cash, the company remained committed to its shareholder obligation, returning $188 million to shareholders through dividends in the most recent quarter. Currently, it offers a quarterly dividend of $0.42 per share and has a dividend yield of 4.64%, as of April 3.
7. Huntington Bancshares Incorporated (NASDAQ:HBAN)
Number of Hedge Fund Holders: 44
Huntington Bancshares Incorporated (NASDAQ:HBAN) is an Ohio-based bank holding company that offers a wide range of banking services, including commercial and consumer banking. The company reported strong earnings in the fourth quarter of 2024, with revenue coming in at $1.95 billion, up 13.5% from the same period last year. Its net interest income of $44 million also grew by 3% on a YoY basis. In addition, the company’s average total deposits increased by 2% from the prior-year period.
In light of the banking crisis of 2023, Huntington Bancshares Incorporated (NASDAQ:HBAN) implemented measures to shield itself from the possible effects of additional interest rate increases. The bank launched a pay-fixed swaption program, functioning as a form of insurance for its portfolio. This initiative aimed to preserve the market value of its securities in the event of a two to three-percentage-point rise in interest rates, serving as a safeguard against potential rate fluctuations.
On January 17, Huntington Bancshares Incorporated (NASDAQ:HBAN) declared a quarterly dividend of $0.155 per share, which was the same as in the previous quarter. Though the company doesn’t hold any dividend growth track record, it has been paying regular dividends to shareholders since 1989, which makes it one of the best dividend stocks on our list. As of April 3, the stock has a dividend yield of 4.61%.
6. M&T Bank Corporation (NYSE:MTB)
Number of Hedge Fund Holders: 46
M&T Bank Corporation (NYSE:MTB) ranks sixth on our list of the best dividend stocks from the regional banking industry. The New York-based bank holding company offers services in commercial banking, consumer banking, institutional banking, and wealth management. The company has a long-standing track record of solid business performance, even during challenging periods, due to its exceptional risk management and high-quality assets. During the Great Recession following the 2008 financial crisis, the bank remained profitable every quarter—continuing a streak of profitability that dates back to the 1970s. Notably, M&T was the only bank among the dozens in the broader market that maintained its dividend without any reductions throughout the crisis, a period that proved especially difficult for the banking sector.
In the fourth quarter of 2024, M&T Bank Corporation (NYSE:MTB) posted a revenue of $2.4 billion, which showed a 3.7% growth from the same period last year. The revenue beat analysts’ estimates by $39.3 million. The company’s capital position has continued to improve, with its CET1 capital ratio rising for the seventh straight quarter, reaching an estimated 11.67% as of December 31, 2024. This marks a 13 basis-point increase from the 11.54% reported on September 30, 2024. In addition, the bank saw a $2.7 billion increase in average investment securities, while the yields on those securities rose by 18 basis points.
M&T Bank Corporation (NYSE:MTB) has a strong balance sheet as the company returned $226 million to shareholders in common stock dividends. Its quarterly dividend comes in at $1.35 per share for a dividend yield of 3.31%, as of April 3. The company has been rewarding shareholders with growing dividends for the past eight consecutive years.
5. U.S. Bancorp (NYSE:USB)
Number of Hedge Fund Holders: 48
U.S. Bancorp (NYSE:USB) is a Minnesota-based bank holding company that provides a wide range of financial services, including commercial and consumer banking, payment processing, wealth management, and investment solutions. The company places a strong emphasis on operational efficiency and prudent balance sheet management, both key factors in supporting its long-term profitability.
In the fourth quarter of 2024, U.S. Bancorp (NYSE:USB) delivered results that slightly exceeded Wall Street’s expectations. Earnings per share came in at $1.07, narrowly beating the forecast of $1.05, while revenue reached $7.01 billion, just above the projected $7 billion. Despite facing economic uncertainty and regulatory changes, the company achieved solid net income growth, reflecting its ability to manage challenges effectively. Net interest income rose slightly to $4.18 billion, supported by successful repricing efforts, although the net interest margin declined marginally to 2.71%. The company also continued to advance its fintech capabilities, highlighted by the launch of Elavon’s cloud-based payment gateway.
On March 11, U.S. Bancorp (NYSE:USB) announced a quarterly dividend of $0.50 per share, which was in line with its previous dividend. It is one of the best dividend stocks on our list, as the company grew its dividends for 14 consecutive years. The stock has a dividend yield of 5.16%, as of April 3.
4. Comerica Incorporated (NYSE:CMA)
Number of Hedge Fund Holders: 50
Comerica Incorporated (NYSE:CMA) is an American financial services company, headquartered in Texas. The company saw its earnings per share decline by 12% to $1.20 in the fourth quarter of 2024, primarily due to higher expenses. Loan demand remained sluggish, and the bank anticipates minimal or no loan growth in 2025, a less optimistic outlook compared to its industry peers. Average loan balances edged down to $50.6 billion, largely driven by commercial real estate loan repayments.
While net interest income is projected to increase by 6%-7% in 2025, core NII is expected to see a more modest rise of around 3%. On a positive note, the bank has a three-year transition period for the Direct Express program, which has the potential to boost core deposits, although it will also come with additional costs.
During the quarter, Comerica Incorporated (NYSE:CMA) observed continued strength in deposit trends, marked by an increase in customer balances, while deposit pricing was managed strategically. Although loan volumes were affected by commercial real estate paydowns, encouraging activity across other segments supported the company’s positive outlook for growth in 2025. Credit quality remained stable, with net charge-offs staying low. Backed by a conservative capital strategy, the company ended the quarter with an estimated CET1 ratio of 11.89%, comfortably above its long-term target of 10%.
Comerica Incorporated (NYSE:CMA) also remained committed to returning value to shareholders, as it paid $93 million worth of dividends in the most recent quarter. Currently, it pays a quarterly dividend of $0.71 per share and has a dividend yield of 5.33%, as recorded on April 3.
3. First Horizon Corporation (NYSE:FHN)
Number of Hedge Fund Holders: 52
First Horizon Corporation (NYSE:FHN) is the parent company of First Horizon Bank that operates through three key divisions: Regional Banking, Specialty Banking, and Corporate. The company offers a comprehensive suite of financial services, catering to both businesses and individuals with products such as loans, deposits, and wealth management solutions. In the past 12 months, the stock has surged by over 12%.
First Horizon Corporation (NYSE:FHN) reported strong earnings in the fourth quarter of 2024, with a revenue of $824 million, which saw a 3% growth from the same period last year. Strong client relationships and a well-balanced business model enabled the company to generate earnings despite a challenging interest rate environment. Business growth remained steady in 2024, supported by a strong net interest margin, higher counter-cyclical revenues, and a decline in net charge-offs. The company achieved solid performance during the quarter, with a two-basis-point expansion in net interest margin, a 6% rise in fixed income revenue, and net charge-offs of 8 basis points, positioning it for a strong start to 2025.
First Horizon Corporation (NYSE:FHN) offers a quarterly dividend of $0.15 per share and has a dividend yield of 3.49%, as of April 3. During the quarter, the company returned $930 million to shareholders through dividends and share buybacks.
2. Truist Financial Corporation (NYSE:TFC)
Number of Hedge Fund Holders: 57
Truist Financial Corporation (NYSE:TFC) offers a wide range of banking services, including commercial banking, savings accounts, mortgages, and credit cards. The company continues to prioritize regulatory compliance, adhering to the stricter prudential standards and capital requirements set for Category III banking institutions. Staying compliant is vital to supporting the company’s day-to-day operations and long-term strategic plans. As one of the largest banks in the US, Truist enjoys a strong foothold in rapidly expanding regions such as Florida and Georgia. The bank has recently ramped up its focus on digital transformation and technological innovation, enhancing its services to better compete with emerging fintech players.
In the fourth quarter of 2024, Truist Financial Corporation (NYSE:TFC) generated $5.11 billion in revenue, marking a 5% year-over-year increase. Net income for the quarter stood at $1.28 billion. The bank saw a $6.5 billion, or 1.4%, increase in average earning assets, mainly due to a $7.7 billion, or 6.6%, rise in average securities. Average deposits rose by $5.7 billion, or 1.5%, while average short-term borrowings jumped by $4.2 billion, or 20%. On the other hand, the average long-term debt declined by $1.2 billion, or 3.4%.
Truist Financial Corporation (NYSE:TFC) also maintains a solid track record when it comes to dividends, having made consistent payments to shareholders since 1997. In 2024, the company returned $3.8 billion to common shareholders through dividends and share repurchases, including $500 million worth of stock buybacks. The dividend payout ratio stood at 57%, with a total shareholder payout ratio of 98%, making Truist one of the best dividend stocks. It currently pays a quarterly dividend of $0.52 per share and has a dividend yield of 5.62%, as of April 3.
1. The PNC Financial Services Group, Inc. (NYSE:PNC)
Number of Hedge Fund Holders: 67
The PNC Financial Services Group, Inc. (NYSE:PNC) is an American bank holding and financial services company that offers a wide range of related services to its consumers. The company delivered a strong performance in 2024 while continuing to invest in the long-term growth of its franchise. The bank expanded its customer base, strengthened client relationships, and remained committed to serving its stakeholders. It achieved record revenue and further reinforced its capital position. Meanwhile, PNC maintained a disciplined approach to cost management, resulting in positive operating leverage.
The PNC Financial Services Group, Inc. (NYSE:PNC) reported revenue of $5.6 billion in the fourth quarter of 2024, which showed a 4% growth from the same period last year. The company posted a net interest income of $3.5 billion, reflecting a 3% increase, or $113 million, primarily due to lower funding costs and the ongoing repricing of fixed-rate assets. The bank’s net interest margin improved by 11 basis points, reaching 2.75%. Meanwhile, fee income declined by 4%, or $84 million, to $1.9 billion, as elevated residential mortgage and capital markets activity in the third quarter contributed to the decrease.
The PNC Financial Services Group, Inc. (NYSE:PNC) currently offers a quarterly dividend of $1.60 per share and has a dividend yield of 3.97%, as of April 3. The company returned $0.9 billion to shareholders in the most recent quarter, including $0.6 billion in dividends. In addition, PNC has been growing has dividends for 14 consecutive years, which makes it one of the best dividend stocks.
Overall, The PNC Financial Services Group, Inc. (NYSE:PNC) ranks first on our list of the best dividend stocks from the regional banking sector. While we acknowledge the potential of PNC as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than PNC but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
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