We recently compiled a list of the 10 Best Bank Stocks With High Dividends. In this article, we are going to take a look at where Citizens Financial Group, Inc. (NYSE:CFG) stands against the other bank stocks.
In 2023, the US banking industry took a major hit, as Silicon Valley Bank collapsed, followed by the downfall of two other major banks. It was the biggest shake-up the industry had seen since the 2008 financial crisis. Despite the US banking crisis, the past two years have been the best for banks since before the Great Recession. Shocking, right?
Banking Sector Performance 2023
According to McKinsey, banks made $7 trillion in revenue and $1.1 trillion in net income globally during 2023, with a return on tangible equity of 11.7%. They have also strengthened their capital and liquidity, with capital levels at 12.8% and liquidity at 77.2%, both improving from 2022. In fact, banks earned more profit than any other sector worldwide last year. Right now, 14% of banks are making up 80% of the industry’s economic profit, which is a big jump from 11% in 2013. This is nearly five times higher than most other industries, where a few big players usually dominate the performance.
In 2023, global dividends surged to a record $1.66 trillion, marking a 5.0% increase on an underlying basis, according to the Janus Henderson Global Dividend Index. The banking sector played a key role in this growth, delivering record payouts and accounting for half of the global increase in dividends. Higher interest rates allowed many banks to expand their margins, with emerging market banks contributing significantly to this increase – though banks in China didn’t join in the dividend boom.
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Banking Sector in 2024
The banking sector is anticipated to maintain its strong performance this year, with analysts offering an optimistic outlook. On December 4, 2024, Moody’s upgraded the global banking sector from negative to stable. The credit rating giant is positive because G-20 countries are easing up on interest rates and making some monetary adjustments, which should help with the asset quality and liquidity of banks. The economy seems to be stabilizing, and that should help banks recover, especially in terms of deposits. Of course, there are some risks like geopolitical tensions, trade issues, and possible shifts in the US policies under the new president could create uncertainties that might affect the global economy and the banking sector. So, while things are looking better, there is still some uncertainty on the horizon.
Our Methodology
For this article, we used the Finviz stock screener to filter out bank stocks with dividend yields exceeding 3%. We focused on picking stocks with a consistent record of paying dividends, offering dividend growth, and being financially stable to steer clear of yield traps. The list below is ranked in the ascending order of dividend yields, as of December 6. We have also mentioned the number of hedge fund holders in each firm, which was sourced from Insider Monkey’s Q3 2024 database.
At Insider Monkey, we are obsessed with 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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Citizens Financial Group, Inc. (NYSE:CFG)
Dividend Yield as of December 6: 3.59%
Number of Hedge Fund Holders: 46
Citizens Financial Group, Inc. (NYSE:CFG) is an American bank whose Consumer Banking segment covers everything from deposit accounts and mortgages to credit cards, loans, and wealth management services. Its Commercial Banking side focuses on lending, leasing, treasury management, and risk management solutions for industries like healthcare, technology, and real estate. Citizens Financial Group, Inc. (NYSE:CFG) certainly deserves a spot when discussing the best bank stocks. The bank has massive presence across the US, with 1,000 branches, $219.7 billion in total assets and $175.2 billion in deposits as of September 30, 2024.
In the third quarter, Citizens Financial Group, Inc. (NYSE:CFG) generated a net income of $392 million, with earnings per share of $0.79. The private banking deposits rose to $5.6 billion, up from $4 billion in the last quarter, and assets under management came in at $4.1 billion. CFG’s private banking segment reached break-even by the middle of the quarter and is expected to start adding to earnings in the fourth quarter. The Q4 forecast looks strong, with a nice rebound in net interest income (NII) and fees, giving CFG positive operating leverage. The bank expects credit to stay stable and will keep buying back shares.
Given its strong capital position, Citizens Financial Group, Inc. (NYSE:CFG) repurchased $325 million worth of common shares in Q3 2024. When you factor in dividends, the bank returned a total of $516 million to shareholders in the third quarter. This included a quarterly dividend payment of $0.42 per share distributed on November 13.
Insider Monkey’s Q3 data suggested that Citizens Financial Group, Inc. (NYSE:CFG) was found in 46 hedge fund portfolios, with Cliff Asness’ AQR Capital Management holding the biggest stake. Asness owns 4.6 million shares of CFG valued at almost $190 million.
Overall CFG ranks 8th on our list of the best bank stocks with high dividends. While we acknowledge the potential of CFG as an investment, our conviction lies in the belief that certain 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 CFG 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.
