12 Best Bank Dividend Stocks to Buy Now

Published on November 1, 2022 at 10:04 am by Vardah Gill in Dividend Stocks, Hedge Funds, News

In this article, we discuss 12 best bank dividend stocks to buy now. You can skip our detailed analysis of the banking sector and its outlook, and go directly to read 5 Best Bank Dividend Stocks to Buy Now.

The banking system around the world underwent major structural reforms during the pandemic in 2020. As physical branches were closed down, the banks chose to shift their operations to digital channels. Even after the pandemic, consumers have continued using digital banking, calling it more convenient than traditional banking. According to a survey by Bankrate, nearly two-thirds of the population in the US uses digital banking services, Moreover, the number of digital users increased by 4% this year from 2018.

The S&P Bank Select Industry Index is down by 10.89% year-to-date, compared with a 19.05% drop in the S&P 500, as of the close of October 30. Despite the current market downturn, US banks reported $64.4 billion in profits in the second quarter of 2022, up 7.8% from the previous quarter, as reported by Reuters. Further analyzing the banking sector, we will discuss the best bank stocks that pay dividends. Some of the names mentioned below include U.S. Bancorp (NYSE:USB), JPMorgan Chase & Co. (NYSE:JPM), and Bank of America Corporation (NYSE:BAC).

Photo by Mirza Babic on Unsplash

Our Methodology:

The companies mentioned below are from the banking sector and pay regular dividends to shareholders. The stocks are ranked according to their dividend yields, as of October 31.

Best Bank Dividend Stocks to Buy Now

12. American Express Company (NYSE:AXP)

Dividend Yield as of October 31: 1.39%

American Express Company (NYSE:AXP) is an American financial services and credit card services company. It also provides other banking services to its consumers. In Q3 2022, the company reported a 21% growth in its card member spending due to continued momentum across goods, traveling, and services spending. During the quarter, the company paid nearly $14 million in dividends to shareholders.

American Express Company (NYSE:AXP) is one of the best dividend stocks on our list as it has been making consistent dividend payments for the past 30 years. Currently, it pays a quarterly dividend of $0.52 per share and has a dividend yield of 1.39%, as of October 31.

In October, BMO Capital lifted its price target on American Express Company (NYSE:AXP) to $166 with a Market Perform rating on the shares. The firm appreciated the company’s higher net interest income and lower costs.

As of the close of Q2 2022, 67 hedge funds tracked by Insider Monkey owned stakes in American Express Company (NYSE:AXP), compared with 69 a quarter earlier. These stakes have a consolidated value of over $25.2 billion. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q2.

In addition to U.S. Bancorp (NYSE:USB), JPMorgan Chase & Co. (NYSE:JPM), and Bank of America Corporation (NYSE:BAC), American Express Company (NYSE:AXP) is another prominent bank dividend stock.

11. Bank of America Corporation (NYSE:BAC)

Dividend Yield as of October 31: 2.43%

Bank of America Corporation (NYSE:BAC) is a North Carolina-based multinational investment bank and financial services holding company. Appreciating the company’s solid Q3 earnings, BMO Capital lifted its price target on the stock in October to $41 and maintained a Market Perform rating on the shares. The firm highlighted the company’s pre-provision net revenue which has shown a 24% growth from the previous quarter.

In the third quarter of 2022, Bank of America Corporation (NYSE:BAC) reported revenue of $24.5 billion, which showed an 8% growth from the same period last year. The company remained committed to its shareholder obligation as it paid $1.8 billion in common dividends during the quarter. Moreover, it also repurchased $450 million worth of common shares.

Bank of America Corporation (NYSE:BAC) currently pays a quarterly dividend of $0.22 per share. The company has been raising its dividends consistently for the past nine years, which makes it one of the best dividend stocks in the banking sector. As of October 31, the stock has a dividend yield of 2.43%.

At the end of Q2 2022, 99 hedge funds tracked by Insider Monkey owned stakes in Bank of America Corporation (NYSE:BAC), the same as in the previous quarter. The combined value of these stakes is roughly $36 billion.

Diamond Hill Capital Management mentioned Bank of America Corporation (NYSE:BAC) in its Q2 2022 investor letter. Here is what the firm has to say:

“Bank of America Corporation (NYSE:BAC) shares were weak in Q2 as the market became increasingly focused on the possibility of a near-term recession and the potential for credit losses along with current fee revenue pressures.”

10. Wells Fargo & Company (NYSE:WFC)

Dividend Yield as of October 31: 2.59%

Wells Fargo & Company (NYSE:WFC) is an American multinational financial services company that provides banking, investment, and mortgage products and services to its consumers. The company raised its dividends twice this year which places it as one of the best dividend stocks on our list. It pays a quarterly dividend of $0.30 per share for a dividend yield of 2.59%, as of October 31.

In October, Piper Sandler raised its price target on Wells Fargo & Company (NYSE:WFC) to $49 with an Overweight rating on the shares. The firm appreciated the company’s Q3 results and also expects it to remain resilient in the current environment.

At the end of Q2 2022, 83 hedge funds tracked by Insider Monkey owned stakes in Wells Fargo & Company (NYSE:WFC), down from 93 a quarter earlier. These stakes hold a collective value of over $5.1 billion. Eagle Capital Management was the company’s leading stakeholder in Q2.

9. CVB Financial Corp. (NASDAQ:CVBF)

Dividend Yield as of October 31: 2.78%

CVB Financial Corp. (NASDAQ:CVBF) is a California-based bank holding company that provides various banking and trust services to its consumers. The company has been making consecutive dividend payments for the past 132 quarters, coming through as one of the best dividend stocks. Currently, it offers a quarterly dividend of $0.20 per share and has a dividend yield of 2.78%, as of October 31.

In the third quarter of 2022, CVB Financial Corp. (NASDAQ:CVBF) reported revenue of roughly $145 million, which showed a 27.4% growth from the same period last year. The company paid $80.2 million in dividends to shareholders during the quarter. Its payout ratio for the quarter stands at a healthy 43%.

As of the close of Q2 2022, 10 hedge funds tracked by Insider Monkey owned stakes in CVB Financial Corp. (NASDAQ:CVBF), the same as in the previous quarter. These stakes have a collective value of over $63.4 million.

8. Cathay General Bancorp (NASDAQ:CATY)

Dividend Yield as of October 31: 2.99%

Cathay General Bancorp (NASDAQ:CATY) is an American bank that provides a wide range of financial services to its consumers. In July, Stephen initiated its coverage on the stock with an Equal Weight rating and a $45 price target, highlighting the company’s consistent high single-digit loan growth.

In Q3 2022, Cathay General Bancorp (NASDAQ:CATY) reported a net income of $99 million, up from $72 million in the same period last year. The company’s total loans increased 7.8% year-over-year to $18.1 billion. It has a very strong dividend payout ratio of 25.3%.

Cathay General Bancorp (NASDAQ:CATY) does not have any dividend growth streak but the company has paid regular dividends to shareholders even during the pandemic. It currently pays a quarterly dividend of $0.34 per share and has a dividend yield of 2.99%, as of October 31.

At the end of June 2022, 18 hedge funds in Insider Monkey’s database owned stakes in Cathay General Bancorp (NASDAQ:CATY), the same as in a quarter earlier. These stakes are valued at over $113 million. Among these hedge funds, Holocene Advisors was the company’s leading stakeholder in Q2.

8. JPMorgan Chase & Co. (NYSE:JPM)

Dividend Yield as of October 31: 3.15%

JPMorgan Chase & Co. (NYSE:JPM), an American multinational investment banking company, pays a quarterly dividend of $1.00 per share and has a dividend yield of 3.15%, as of October 31. The company has been raising its dividends consistently for the past seven years, which makes it one of the best dividend stocks in the banking sector.

During the third quarter of 2022, JPMorgan Chase & Co. (NYSE:JPM) paid $3 billion in dividends to shareholders, which shows that the company’s cash flow is stable. Its revenue for the quarter showed a 10.4% growth from the same period last year at $32.7 billion.

Citigroup mentioned JPMorgan Chase & Co. (NYSE:JPM) in its October investors’ note and said that JPM is one of the most reliable stocks for long-term investors. The firm raised its price target on the stock to $135 with a Buy rating on the shares.

As of the close of Q2 2022, 104 hedge funds tracked by Insider Monkey owned stakes in JPMorgan Chase & Co. (NYSE:JPM), falling from 110 in the previous quarter. These stakes hold a combined value of over $5.8 billion, compared with $5 billion worth of stakes owned by hedge funds in the previous quarter.

6. The Bank of New York Mellon Corporation (NYSE:BK)

Dividend Yield as of October 31: 3.50%

The Bank of New York Mellon Corporation (NYSE:BK) is an American corporate investment banking company that provides related services to its customers. In Q3 2022, the company reported revenue of $4.3 billion, up 6% from the same period last year. The company’s net interest revenue increased by 44%. During the quarter, it paid $303 million to shareholders in dividends, which makes it one of the best dividend stocks on our list.

On October 17, The Bank of New York Mellon Corporation (NYSE:BK) declared a quarterly dividend of $0.37 per share, in line with its previous dividend. The company has paid regular dividends to shareholders for the past 21 years. It can be a good addition to dividend portfolios alongside other bank dividend stocks like U.S. Bancorp (NYSE:USB), JPMorgan Chase & Co. (NYSE:JPM), and Bank of America Corporation (NYSE:BAC).

Citigroup upgraded The Bank of New York Mellon Corporation (NYSE:BK) to Buy in October with a $46 price target, acknowledging the company’s strong return outlook and capital return capacity. The firm also mentioned that the company has an upside to net interest income estimates.

At the end of June 2022, 38 hedge funds in Insider Monkey’s database owned stakes in The Bank of New York Mellon Corporation (NYSE:BK), down from 54 in the previous quarter. These stakes are collectively valued at over $3.6 billion. First Eagle Investment Management was one of the company’s leading stakeholders in Q2.

Ariel Investments mentioned The Bank of New York Mellon Corporation (NYSE:BK) in its Q4 2021 investor letter. Here is what the firm has to say:

“Rising interest rates, after a surprisingly long period of low absolute rates and negative “real” rates, will create a headwind. While there has been much debate about the cause of these low rates, we believe the most important factor has been the $120 billion in monthly federal reserve open market bond purchases and the accumulation of an $8 trillion balance sheet. The former will end, and the latter will shrink. It is not just the Fed that has aggressively purchased bonds, bidding up prices and lowering yields. Bond traders and hedge fund managers have added to positions, confident that being on the same side as the Fed was the wise place to be. Now as the Fed is about to become a seller of bonds rather than a buyer, Wall Street’s “smart money” is likely to follow suit. Against this backdrop, fixed income securities and bond substitutes such as high dividend paying utilities and absolute return hedge funds are substantially overpriced and are not likely to produce attractive returns going forward.

This expectation of a reversion to the mean for interest rates helped 2021 performance, though not as much as we had hoped. The yield on the U.S. 10-year Treasury did indeed increase from +0.92% at the beginning of the year to +1.52% at year-end. An underreported story was the poor performance of bonds last year. The Barclays Aggregate Index declined -1.67% for the year ending December compared to a return of +28.71% for equities as measured by the S&P 500. Interest rates have continued to climb in 2022 with the 10-year Treasury at +1.79% as we go to print. This move higher in rates has contributed to our good, early start to 2022. Smaller positions in The Bank of New York Mellon Corporation (BK) also benefited from higher rates, principally with their ability to invest customer cash.”

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