In this article, we will take a look at the 5 best bank stocks for dividends. For a detailed analysis of these companies, go directly to the 10 Best Banks Stocks for Dividends.
5. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 60
Total Value of Hedge Fund Holdings: $21.8 Billion
Dividend Yield as of May 7: 1.10%
Ranking 5th in our list of the 10 best bank stocks for dividends is American Express Company (NYSE:AXP). The New York-based multinational financial services corporation has over 114 million cardholders. American Express Company (NYSE:AXP) has a market cap of $127.7 billion and total revenue in the full year 2020 of $36.1 billion. In April, Deutsche Bank maintained its Buy rating on American Express Company and raised the price target to $158.
There were 60 hedge funds that reported owning stakes in American Express Company (NYSE:AXP) at the end of the fourth quarter, up from 48 funds a quarter earlier. The total value of these stakes at the end of Q4 is $21.8 billion.
Bretton Fund mentioned that American Express Company (NYSE:AXP) has a reasonably diverse client base overall in its Q4 2020 investor letter:
“American Express has elements of both a bank (it extends credit card loans) and a payments processor (most of its revenue is fees from cardholders and merchants) and was hit pretty hard by Covid-19, though we expect most of the impact will be transitory. It has a relatively diversified customer base overall, but a meaningful portion of its card activity is from business travel, which…there wasn’t a lot of last year. Similar to the banks, American Express recognized loan losses in anticipation of large defaults, though it’s not clear all of that will come to pass. Its stock returned -1.1%, while earnings per share were down 53%.”
4. Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 76
Total Value of Hedge Fund Holdings: $4.60 Billion
Dividend Yield as of May 7: 1.37%
New York-based multinational investment bank and financial services company Goldman Sachs Group, Inc. (NYSE:GS) ranks 4th in our list of 10 best bank stocks for dividends. The company was founded in 1869 and had over 3 million total customers. On May 14, BMO Capital analyst James Fotheringham upgraded Goldman Sachs to Outperform from Market Perform with a price target of $276. Goldman Sachs Group, Inc. (NYSE:GS) has a market cap of $126.0 billion. The company’s net revenue in 2020 came in at $10.78 billion. Shares of GS increased 100% over the past twelve months.
There were 76 hedge funds that reported owning stakes in Goldman Sachs Group, Inc. (NYSE:GS) at the end of the fourth quarter, up from 70 funds a quarter earlier. The total value of these stakes at the end of Q4 is $4.60 billion.
3. Citigroup, Inc. (NYSE:C)
Number of Hedge Fund Holders: 95
Total Value of Hedge Fund Holdings: $7.12 Billion
Dividend Yield as of May 7: 2.73%
Ranking 3rd in our list of the 10 best bank stocks for dividends is multinational investment bank Citigroup, Inc. (NYSE:C). The New York-based leading global bank has over 200 million customer accounts. On May 7, following an increase in customer demand, Citi announced plans to offer cryptocurrency services such as trading, custody, and finance.
Citigroup, Inc. (NYSE:C) has a market cap of $155.19 billion. In 2020, Citigroup, Inc.’s net income came in at $11.4 billion. Shares of C rose 62% over the past twelve months. In April, Argus Research maintained a Buy rating on Citigroup, Inc. and raised the price target to $87.
There were 95 hedge funds that reported owning stakes in Citigroup, Inc. (NYSE:C) at the end of the fourth quarter, up from 91 funds a quarter earlier. The total value of these stakes at the end of Q4 is $7.12 billion.
Artisan Partners Limited Partnership mentioned they sold their positions in C in its Q4 2020 investor letter:
“We fully exited position in Citigroup. Global financial services company Citigroup made a $900 million clerical error and received a public reprimand from federal regulators. This, after a decade focused on process control, information technology and risk systems, makes the error substantially more costly than just the $900 million mistake. Regulators believe the company’s risk management improvements have fallen short of expectations. To rectify the situation, a process and technology spending surge could negatively affect 2021-2022 profits by 10% to 20%. Trust and confidence are important in large financial institutions, and this incident combined with the CEO’s sudden retirement shook ours.”
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2. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 99
Total Value of Hedge Fund Holdings: $8.74 Billion
Dividend Yield as of May 7: 0.87%
Ranking 2nd in our list of 10 best bank stocks for dividends is Wells Fargo & Company (NYSE:WFC). The California-based financial services company Wells Fargo & Company was founded in 1852 and has grown its customer base to over 70 million customers.
Wells Fargo & Company (NYSE:WFC) has a market cap of $192.3 billion. Wells Fargo & Company revenue in 2020 came in at $80.3 billion. Shares of WFC jumped 83% over the past twelve months. In March, Morgan Stanley maintained an Overweight rating on Wells Fargo & Company (NYSE:WFC) and raised the price target to $47.
There were 99 hedge funds that reported owning stakes in Wells Fargo & Company at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $8.74 billion.
Davis Funds mentioned that though banks in general have been harmed by the recession and have sustained credit losses, Wells Fargo has also been harmed by operating errors in its Q4 2020 investor letter:
“Detractors to performance relative to the index include financial services holdings such as Wells Fargo. While banks in general have suffered due to the recession and experienced credit losses, Wells Fargo also suffered from operational missteps. It is our expectation, however, that our bank holdings in general will benefit from stronger economic growth as the pandemic recedes; and we believe Wells Fargo in particular, will, over time, lower their costs and successfully grow their businesses.”
1. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 99
Total Value of Hedge Fund Holdings: $35.3 Billion
Dividend Yield as of May 7: 1.74%
Topping the 10 best bank stocks for dividends is Bank of America Corporation (NYSE:BAC). The North Carolina-based multinational investment bank and financial services firm has over 66 million customers. On May 4, Baird analyst David George downgraded BAC from Outperform to Neutral with a price target of $42.00. Bank of America Corporation (NYSE:BAC) has a market cap of $361.45 billion. Bank of America Corporation’s total revenue came in at $93.7 billion in 2020. Shares of BAC surged 78% over the last twelve days.
There were 99 hedge funds that reported owning stakes in Bank of America Corporation (NYSE:BAC) at the end of the fourth quarter, up from 88s funds a quarter earlier. The total value of these stakes at the end of Q4 is $35.3 billion.
GoodHaven Capital Management mentioned that they added positions in BAC in the last six months in its Q4 2020 investor letter:
“Finally, the Federal Reserve has just relaxed share buyback restrictions for Bank of America (and some of their brethren) – a positive development. We added to Bank of America during the last six months. We continue to find plenty of potential new investments to consider, even after the market’s recent material rebound.”
You can also take a peek at 10 Best Travel Stocks to Buy Right Now, and 10 Best Automotive Stocks to Invest in Now.
