In this article, we will take a look at some of the best dividend stocks from the financial sector.
In 2024, financial stocks have led the market, delivering one of the strongest performances among all sectors. While the broader financial sector is expected to continue its upward trajectory, certain stocks within the group appear even better positioned for growth. The broader market’s financial sector has climbed nearly 30% this year, surpassing the overall market and even outperforming the technology sector, which includes many of the high-profile mega-cap tech stocks. The financial index is up by over 7% since the start of 2025.
The US banking sector continued to expand in the third quarter of 2024, despite sluggish loan growth. The industry saw a 1.4% sequential increase in total assets during the period. Collectively, the 50 largest US banks added $377.22 billion in aggregate assets during the third quarter, with 35 institutions reporting growth, according to data from S&P Global Market Intelligence. This marked a turnaround from the second quarter when the top 50 banks saw a combined decline of $128.01 billion from the first quarter of the year. The report further mentioned that as of September 30, the total assets of the 50 largest US banks stood at $23.985 trillion. Among the 39 banks with assets ranging from $50 billion to $500 billion, 25 recorded an increase in assets during the third quarter.
Also read: 10 Low PE High Dividend Stocks to Buy Now
Financial stocks experienced a sharp and widespread rally following President-elect Donald Trump’s victory in the 2024 presidential election. This surge was largely fueled by market optimism surrounding a potentially more relaxed regulatory environment in 2025, particularly in relation to mergers and acquisitions. In November, the median total return for the 211 banks tracked by S&P Global Market Intelligence climbed to 13.4%, significantly outpacing the broader market’s 5.9% gain.
Another key factor influencing bank performance was the Federal Reserve’s release of parameters for its annual industry stress test. The 2025 test outlined less severe economic shocks than previous years, although it still projected a rise in U.S. unemployment to 10% and a 33% decline in home prices. Compared to prior tests, the latest scenario included milder increases in joblessness and less drastic drops in stock and real estate values. Barclays analyst Jason Goldberg emphasized these adjustments in his report, “2025 Stress Test: Scenarios Easier than Past Two Years.” Meanwhile, Bank of America analyst Ebrahim Poonawala suggested that the test’s reduced stringency and greater predictability could lead banks to hold smaller capital buffers later in the year.
The financial sector is cyclical, meaning its performance is closely tied to the overall health of the economy. The US economy has maintained steady momentum, increasing the likelihood of a “soft landing”—a scenario that would help ease concerns about a potential mild recession that could weigh on financial stocks. According to analysts, a key shift heading into 2025 compared to previous years is the outlook for interest rates. The second half of 2024 marked the start of a new rate cycle, with the Federal Reserve implementing its first rate cut since the early stages of the pandemic. For banks, interest rate changes present both opportunities and challenges. While higher rates can boost net interest margins, rate fluctuations can also impact lending activity and overall profitability.
Investor enthusiasm for financial stocks is on the rise, driven in large part by their appealing dividend payouts. According to a report by Janus Henderson, the financial sector saw headline growth of 7.7% growth in dividend payouts on a YoY basis. The report also mentioned that the industry paid $72 billion in dividends in the third quarter of 2024. Given this, we will take a look at some of the best dividend stocks from the financial sector.
photo by scott graham on Unsplash
Our Methodology:
For this list, we scanned Insider Monkey’s database of 900 hedge funds as of Q3 2024 and identified dividend stocks from the finance sector. These companies offer a wide range of financial services, including banking, insurance, investment management, and financial planning. The stocks mentioned below also offer stable dividend yields. From the resultant list, we picked 12 stocks with the highest number of hedge fund investors and ranked them 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 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
12. The Bank of New York Mellon Corporation (NYSE:BK)
Number of Hedge Fund Holders: 45
The Bank of New York Mellon Corporation (NYSE:BK) is a New York-based financial services company that was established in 2007 through the merger of the Bank of New York and Mellon Financial Corporation and became the largest custodian bank globally. Unlike conventional banks that offer commercial and consumer services such as accepting deposits and issuing loans, BNY Mellon focuses on providing security services to asset owners, including other financial institutions.
The Bank of New York Mellon Corporation (NYSE:BK) delivered robust earnings in the fourth quarter of 2024, with revenue reaching $4.8 billion—an 11% increase compared to the same period the previous year. For the full fiscal year, net income climbed to $4.3 billion, marking a significant 43% surge from 2023. Over the course of the year, it introduced a new commercial coverage model, developed innovative client-focused products and solutions, and undertook a brand refresh. In addition, it announced and completed its first acquisition in several years while initiating a phased transition to its strategic platforms operating model. The company also remained committed to strengthening its corporate culture and continued attracting top talent to enhance its workforce.
In addition to delivering strong earnings, The Bank of New York Mellon Corporation (NYSE:BK) also remained committed to returning value to shareholders. In the latest quarter, the company returned $349 million to shareholders through dividends. It has also raised its payouts for 14 years in a row, which makes BK one of the best dividend stocks on our list. The company offers a quarterly dividend of $0.47 per share and has a dividend yield of 2.14%, as of February 16.
11. Truist Financial Corporation (NYSE:TFC)
Number of Hedge Fund Holders: 45
Truist Financial Corporation (NYSE:TFC) is an American bank holding company that offers a wide range of services, including commercial banking, savings accounts, mortgages, and credit cards. In the fourth quarter of 2024, the company generated $5.11 billion in revenue, reflecting a 5% increase from the same period the previous year. The company reported a net income of $1.28 billion for the quarter. Average earning assets expanded by $6.5 billion, or 1.4%, primarily driven by a $7.7 billion, or 6.6%, rise in average securities. Meanwhile, average deposits grew by $5.7 billion, or 1.5%, and average short-term borrowings climbed by $4.2 billion, or 20%. In contrast, average long-term debt declined by $1.2 billion, or 3.4%.
Regulatory compliance remains a key focus for Truist Financial Corporation (NYSE:TFC) as it adheres to enhanced prudential standards and capital requirements applicable to a Category III banking institution. Meeting these obligations is essential for maintaining operations and supporting strategic initiatives. However, as one of the top 10 banks in the US, Truist holds a strong market presence in fast-growing regions like Florida and Georgia. Recently, the bank has emphasized digital innovation and technological advancements, strengthening its service offerings to remain competitive, particularly against fintech firms. In the past 12 months, the stock has surged by nearly 30%.
Truist Financial Corporation (NYSE:TFC) maintains a strong dividend profile, reflecting its dedication to delivering value to shareholders. It has been making regular dividend payments to shareholders since 1997, which makes it one of the best dividend stocks. In 2024, the company returned $3.8 billion to common shareholders through dividends and share buybacks. This included $500 million in common share repurchases, resulting in a dividend payout ratio of 57% and a total payout ratio of 98%. The company’s quarterly dividend comes in at $0.52 per share for a dividend yield of 4.44%, as recorded on February 16.
10. Morgan Stanley (NYSE:MS)
Number of Hedge Fund Holders: 55
Morgan Stanley (NYSE:MS) is a global financial services company that offers a wide range of related services and products to its consumers. Recently, the company has focused on growing its wealth management division, strengthening its technological infrastructure, and ensuring financial stability to align with changing regulations. Its progress has been fueled by efforts to enhance client services through technological innovation while managing asset expansion and effectively addressing regulatory challenges and risks. The stock has soared by almost 61% over the past year.
In the fourth quarter of 2024, Morgan Stanley (NYSE:MS) posted revenue of $16.2 billion, marking a 25% increase from the same period a year earlier. Net income climbed to $3.7 billion, or $2.22 per diluted share, compared to $1.5 billion, or $0.85 per share, in the previous year. Total client assets in Wealth and Investment Management reached $7.9 trillion, driven by strong market performance and solid net inflows. The company remains focused on four core pillars—strategy, culture, financial strength, and growth—to support its Integrated Firm model and drive long-term value for shareholders.
Morgan Stanley (NYSE:MS) remained committed to returning value to shareholders, as the company paid $150 million to investors through dividends in the most recent quarter. The company offers a quarterly dividend of $0.925 per share and has a dividend yield of 2.66%, as of February 16.
9. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 62
American Express Company (NYSE:AXP) ranks ninth on our list of the best dividend stocks from the financial services sector. The American financial services company offers some of the most competitive credit cards available, largely due to its highly appealing Membership Rewards program. Cardholders can accumulate perks and bonuses with ease, even without high spending. In addition, the company operates as both the issuer of its cards and the processor of its transactions, giving it access to extensive customer data. This allows for personalized reward offerings, making its cards highly engaging. As a result, customers often remain loyal, using their American Express cards for years, if not decades.
In the fourth quarter of 2024, American Express Company (NYSE:AXP) generated over $17 billion in revenue, marking a 9% increase from the same period the previous year. Net income exceeded $2.1 billion, reflecting 12% growth year over year. The company set new records in annual Card Member spending, net card fee revenues, and new card acquisitions, issuing 13 million new cards throughout the year. Moreover, it expanded its global presence by adding millions of new merchant locations. By year-end, growth accelerated, with billings rising 8% in the fourth quarter, driven by higher consumer and commercial spending during the holiday season.
On January 24, American Express Company (NYSE:AXP) declared a 17.1% growth in its quarterly dividend to $0.82 per share. This was the company’s sixth dividend increase in the past three years. As of February 16, the stock has a dividend yield of 0.90%.
8. Moody’s Corporation (NYSE:MCO)
Number of Hedge Fund Holders: 67
Moody’s Corporation (NYSE:MCO) is an American multinational financial services company. It recently reported its Q4 2024 earnings, with revenues coming in at $1.67 billion. The revenue, though, showed a 13% growth from the same period last year, missed analysts’ estimates by $40.6 million. Moody’s Analytics reported an 8% increase in revenue, reaching $863 million, driven by strong performance in the banking and insurance sectors. At the same time, MIS experienced significant growth, with revenue climbing 18% to $809 million, largely due to a 29% surge in transactional revenue, supported by increased corporate finance activity.
Moody’s Corporation (NYSE:MCO)’s emphasis on innovation, coupled with expectations of macroeconomic stability, provides a strong foundation for future growth. For 2025, the company expects high-single-digit revenue growth, with Adjusted Diluted EPS projected between $14.00 and $14.50. Management remains confident in capitalizing on favorable market conditions through strategic execution across both business segments.
Moody’s Corporation (NYSE:MCO) is a solid dividend payer with a stable cash position. In FY24, the company generated an operating cash flow of over $2.8 billion, up from $2.1 billion in 2023. Its free cash flow also grew to $2.5 billion, from 41.88 billion in a year-ago period. The growth in operating cash flow and free cash flow was largely attributed to a rise in net income, driven by strong revenue expansion across both business segments. The company also declared an 11% increase in its quarterly dividend to $0.94 per share. Through this increase, the company stretched its dividend growth streak to 15 years. The stock has a dividend yield of 0.72%, as of February 16.
7. The Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 72
The Goldman Sachs Group, Inc. (NYSE:GS) is a New York-based multinational investment bank and financial services company. Its revenue streams come from advisory fees for mergers and acquisitions, underwriting services, proprietary trading, prime brokerage, and private equity investments. In addition, it earns income through its direct banking arm, Goldman Sachs Bank USA, as well as various hedge funds. By structuring sophisticated financial products, supporting initial public offerings, and making strategic investments, the firm sustains its competitive edge. With a strong reputation, an extensive client network, and deep financial expertise, it continues to be a dominant force in the global financial industry.
In the fourth quarter of 2024, The Goldman Sachs Group, Inc. (NYSE:GS) posted revenue of $13.87 billion, marking a 23% increase from the same period a year earlier. For the full year, assets under supervision climbed 12% to a record $3.14 trillion. The firm’s book value per common share rose 7.4% to $336.77. Moreover, Goldman Sachs strengthened its liquidity position, closing the year with $182 billion in cash and cash equivalents, up from $155 billion in the previous quarter.
The Goldman Sachs Group, Inc. (NYSE:GS) currently offers a quarterly dividend of $3.00 per share and has a dividend yield of 1.82%, as of February 16. In FY24, the company distributed $3.8 billion to shareholders through dividends. Moreover, it has kept its dividend steady since 1999, which makes GS one of the best dividend stocks in the financial sector.
6. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 72
Wells Fargo & Company (NYSE:WFC) is a financial services company, based in California. While consumer banking continues to be the company’s primary source of revenue, its investment banking division is becoming an important driver of growth, with investment banking fees surging 59% year over year in the latest quarter.
Wells Fargo & Company (NYSE:WFC) reported $20.3 billion in revenues in the fourth quarter of 2024, showing a slight 0.5% decline from the same period the previous year. However, net income rose significantly to $5.07 billion, up from $3.4 billion a year earlier. The company saw strong growth in fee-based revenue, which increased 15% year over year, helping offset the expected decline in net interest income. Operating expenses were lower than the prior year, while credit trends remained stable. Wells Fargo also maintained a solid capital position, closing the year with an 11.1% CET1 ratio.
On January 28, Wells Fargo & Company (NYSE:WFC) declared a quarterly dividend of $0.40 per share, which fell in line with its previous dividend. Overall, the company has been making regular dividend payments to shareholders since 1988, which places it on our list of the best financial sector dividend stocks. As of February 16, the stock offers a dividend yield of 2.00%.
5. The Charles Schwab Corporation (NYSE:SCHW)
Number of Hedge Fund Holders: 74
The Charles Schwab Corporation (NYSE:SCHW) is a Texas-based financial services company that offers investing and commercial banking services to its consumers. In the fourth quarter of 2024, the company reported $5.3 billion in revenue, marking a 20% increase from the same period a year earlier. This growth was fueled by higher client activity, with active brokerage accounts rising 5% to 36.5 million, reflecting the company’s ability to attract new clients with its competitive offerings. The ongoing integration of TD Ameritrade further bolstered Schwab’s market position, adding $1.6 trillion in client assets to its platform. Net interest revenue reached $2.53 billion, while asset management and administration fees contributed $1.5 billion.
On January 13, The Charles Schwab Corporation (NYSE:SCHW) launched the Schwab Core Bond ETF, its second actively managed fixed-income ETF. This follows the introduction of the Schwab Ultra-Short Income ETF in August 2024. The new fund provides investors with access to the firm’s portfolio management expertise while benefiting from the flexibility and efficiency of an ETF structure.
The Charles Schwab Corporation (NYSE:SCHW)’s maintained a solid cash position in the latest quarter, closing with over $42 million in cash and cash equivalents, up from $35 million in the prior quarter. On January 29, the company announced an 8% increase in its quarterly dividend, raising it to $0.27 per share. The stock has a dividend yield of 1.34%, as of February 16. It is one of the best dividend stocks on our list as the company has paid regular dividends to shareholders since 1990.
4. S&P Global Inc. (NYSE:SPGI)
Number of Hedge Fund Holders: 85
S&P Global Inc. (NYSE:SPGI) is an American capital market company that offers services in financial information and analytics. For the quarter ending December 31, the financial services intelligence firm reported a 14% increase in revenue compared to the previous year, while adjusted earnings per share (EPS) climbed 20% to $3.77. Adding to the positive momentum, the company provided an optimistic outlook for the coming year and announced a new share repurchase program.
A key measure of operating momentum is billed issuance, which represents the total value of rated credit instruments. In 2024, this metric hit a record $3.9 trillion, marking a 54% increase from the prior year, driven by favorable market conditions, including tight credit spreads and lower interest rates. S&P Global Inc. (NYSE:SPGI)’s Ratings segment revenue showed a 31% year-over-year growth in 2024, with a notable shift beyond the traditional focus on investment-grade and high-yield debt. The company has been expanding into other loan categories and structured products, further diversifying its revenue streams.
S&P Global Inc. (NYSE:SPGI)’s cash position also came in strong. In FY24, the company posted an operating cash flow of $5.7 billion, up from $3.7 billion in 2023. The free cash flow also jumped to $5.27 billion, from $3.2 billion in a year-ago period. This cash flow enabled the company to return $1.1 billion to shareholders through dividends.
On January 28, S&P Global Inc. (NYSE:SPGI) declared a 5.5% hike in its quarterly dividend to $0.96 per share. This marked the company’s 53rd consecutive year of dividend growth, which makes SPGI one of the best dividend stocks on our list. The stock offers a dividend yield of 0.71%, as of February 16.
3. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 88
Citigroup Inc. (NYSE:C) ranks third on our list of the best dividend stocks in the financial sector. The American multinational investment bank offers a wide range of related services to its consumers. The company is in the midst of a multi-year restructuring, simplifying its operations by withdrawing from complex business segments and concentrating on areas that can deliver returns meeting or exceeding its cost of capital. Over the last three years, it has made significant strides in enhancing risk management, compliance, and overall accountability. In the past 12 months, the stock has surged by over 54%.
In fiscal year 2024, Citigroup Inc. (NYSE:C) reported a nearly 40% rise in net income, reaching $12.7 billion and exceeding its annual revenue target. This growth was driven by strong results across its Services, Wealth, and US Personal Banking segments. The company kept expenses within its expected range, improved its efficiency ratio, and successfully executed a major reorganization. Annual revenue totaled $81.1 billion, reflecting a 3% increase from the previous year.
Citigroup Inc. (NYSE:C), one of the best dividend stocks, currently offers a quarterly dividend of $0.56 per share. The stock has a dividend yield of 2.65%, as of February 16. The company remained committed to returning value to shareholders, paying $6.7 billion in dividends and share repurchases in FY24. It has paid uninterrupted dividends for 34 years straight.
2. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 98
Bank of America Corporation (NYSE:BAC) is a North Carolina-based financial services company and investment bank. The company possesses several key strengths that reinforce its market position and provide a competitive edge against both traditional banks and fintech firms. Its extensive distribution network, which integrates a robust digital platform with a widespread branch presence, helps expand its low-cost deposit base and attract new customers, fueling revenue growth. In addition, its large scale supports efficient cost management, contributing to consistent profitability. The bank’s strong brand reputation further enhances its appeal to both existing and potential clients.
In the past year, Bank of America Corporation (NYSE:BAC) has delivered a nearly 38% return to shareholders. The company reported strong earnings in the fourth quarter of 2024, with revenues coming at $25.3 billion, an increase from $22 billion in the same period the previous year. Net income more than doubled to $6.7 billion, up from $3.1 billion a year earlier. The bank also expanded its customer base, adding 213,000 new consumer checking accounts, marking six straight years of quarterly growth. Moreover, it returned $2 billion to shareholders through dividend payments.
On January 29, Bank of America Corporation (NYSE:BAC) declared a quarterly dividend of $0.26 per share, which was in line with its previous dividend. The stock supports a dividend yield of 2.21%, as of February 16. It is one of the best dividend stocks on our list as the company has paid regular dividends to shareholders for 27 years in a row.
1. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 105
JPMorgan Chase & Co. (NYSE:JPM), one of the largest banks in the US, has a strong presence in commercial banking, financial transaction processing, and asset management. In fiscal year 2024, the bank delivered record earnings, posting an annual profit of $58.5 billion—an 18% increase from the previous year. This growth was largely fueled by its dealmakers and traders benefiting from a market rebound in the fourth quarter. However, net interest income (NII) declined 3% year-over-year to $23.5 billion in Q4 2024, marking its first drop since 2021.
JPMorgan Chase & Co. (NYSE:JPM) is recognized as a leading dividend stock, having maintained consistent dividend payments to shareholders since 1972. In the most recent quarter, the company reinforced its commitment to investor returns by distributing $3.5 billion in dividends. It currently offers a quarterly dividend of $1.25 per share and has a dividend yield of 1.81%, as of February 16.
JPMorgan Chase & Co. (NYSE:JPM) has outperformed the market in the past 12 months, surging by over 54%. The company’s strong performance has been largely driven by its emphasis on investment banking and wealth management. In the fourth quarter of 2024, investment banking fees jumped 49% year-over-year, reflecting heightened client activity. At the same time, the Asset & Wealth Management division posted a 25% rise in net income, reaching $1.5 billion, supported by record client inflows that expanded assets under management.
Overall JPMorgan Chase & Co. (NYSE:JPM) ranks first on our list of the best dividend stocks from the finance sector. While we acknowledge the potential for JPM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than JPM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. 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.
