We recently compiled a list of the Dividend Contenders List: Top 15. In this article, we are going to take a look at where The PNC Financial Services Group, Inc. (NYSE:PNC) stands against the other dividend contenders.
Dividend stocks have long been favored by investors for the income they generate, and they become even more appealing when dividends increase over time. Investors frequently seek out companies with a strong history of raising their dividends, as this growth boosts their income over the long term. Sustaining long-term dividend growth is challenging. For instance, “dividend aristocrats” are companies that have grown their dividends consistently for at least 25 years, and only about 68 US companies have been successful in achieving this. This demonstrates how difficult it is to attain such a high standard. However, many companies still manage to build shorter dividend growth histories, showcasing their resilience and potential to reach even greater milestones over time. Dividend contenders are well-regarded for having raised their dividends for 10 straight years, though they have yet to reach the 25-year mark needed to be considered long-term dividend growers.
Investors are drawn to dividend growth stocks, as these stocks have shown strong performance over the years. Data from Ned Davis Research covering the past 50 years revealed that high-quality companies that initiate and increase dividends have delivered higher returns and lower volatility than an equal-weighted index. By holding a portfolio of dividend growth stocks, investors can potentially achieve not only favorable risk-adjusted returns but also a more stable investment experience—one less impacted by the risks of market timing, which can reduce long-term gains. This strategy can help investors build wealth steadily over time, contributing to a more secure financial future.
Recently, tech stocks have surged to the forefront, and investors are capitalizing on this momentum, temporarily overshadowing dividend stocks. However, this shift doesn’t imply a dim outlook for dividend stocks. Over the long term, dividend growth stocks have consistently demonstrated their strength and reliability. According to a report by Nuveen, companies that consistently grow or start paying dividends have delivered higher annualized returns with less volatility compared to other parts of the equity market. Although these dividend growth stocks don’t outperform in every market condition, their solid risk-adjusted returns over extended periods make them a strong foundation for an equity portfolio.
Also read: Dividend Champions List: Top 15
Michael Clarfeld, manager of the Dividend Strategy portfolios at ClearBridge Investments, supports investing in dividend stocks. Clarfeld emphasizes the value of long-term compounding, viewing dividend stocks as essential for a well-rounded portfolio. He advocates for a dividend growth approach, focusing on companies capable of steadily increasing their dividends over time. Instead of chasing high yields for immediate gains, he advises investors to consider total return, which includes the reinvestment of dividends. In an interview with Morningstar, he noted that the average company in his portfolios has compounded dividends at around 9% annually, meaning an investor’s income could potentially double every eight years. Clarfeld further said that dividend investing centers on evaluating a company’s cash flows and how they allocate payouts to investors.
In this dividend contenders list, we will take a look at companies that have raised their payouts for at least 10 consecutive years.
Our Methodology:
This list focuses on dividend contenders—companies known for raising their dividends consistently for 10 years but less than 25. From this group, we selected those with the highest dividend yields as of November 11, ranked from lowest to highest yield.
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).
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The PNC Financial Services Group, Inc. (NYSE:PNC)
Dividend Yield as of November 11: 3.04%
The PNC Financial Services Group, Inc. (NYSE:PNC) is an American bank holding and financial services company that offers a wide range of services to its consumers. The company reported strong earnings in the third quarter of 2024, achieving positive operating leverage through revenue growth and disciplined expense management, while also expanding its customer base and bolstering capital levels. Notably, net interest income and net interest margin improved, signaling the start of a growth path toward anticipated record NII in 2025. In June, the Federal Reserve released its annual stress test results, showing PNC with a start-to-trough CET1 ratio depletion of just 1.6%, the best performance among its peers.
The PNC Financial Services Group, Inc. (NYSE:PNC) reported revenue of $5.43 billion in Q3 2024, up nearly 4% from the same period last year. The company’s net interest income for the quarter came in at $3.4 billion, growing from $3.3 billion in the previous quarter. It is actively utilizing AI to enhance its operations. Recently, the company has entered into an agreement with Plaid to form direct data access, allowing PNC customers across the country to securely connect and share their financial data with selected financial apps via Plaid. PNC utilizes Akoya as its API provider to transmit customer financial information to data recipients.
In October, The PNC Financial Services Group, Inc. (NYSE:PNC) declared a quarterly dividend of $1.60 per share, having raised it by 3.2% in July. This marked the company’s 14th consecutive year of dividend growth, which makes PNC one of the best stocks on our dividend contenders list. The stock has a dividend yield of 3.08%, as of November 11.
At the end of Q2 2024, 51 hedge funds tracked by Insider Monkey reported having stakes in The PNC Financial Services Group, Inc. (NYSE:PNC), compared with 52 in the previous quarter. These stakes have a total value of $911 million. With 2.2 million shares, Citadel Investment Group was the company’s leading stakeholder in Q2.
Overall PNC ranks 15th on our list of the top dividend contenders. While we acknowledge the potential of PNC 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 timeframe. If you are looking for an AI stock that is more promising than PNC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.