There is always one set of investors who love to invest in bank stocks because of the stability that is associated with this sector. Banks enjoy a reputation and there is a lot of reliability riding on them. Currently, the banking sector is going through some rough weather and there are just a few stocks that provide reasonable returns for investors. If you are looking for the ones that pay a good dividend, your choices are really limited. The following stocks are the ones that experts recommend for investors who are looking for good dividends from the banking sector:
Customer focus is the priority
Toronto Dominion Bank (TD, Financial) is one of the best dividend paying banks today because customer focus is their main priority. With a dividend yield of 3.6%, it is no surprise that the TD bank has managed to figure as the top name in the list. This bank is the proud owner of various impressive titles like “America’s best bank”, “America’s Most Convenient Bank” etc. One of the key features of the Toronto Dominion Bank is that it has branches in many places in the US that are open on weekends and during the late evening hours. This makes it easier for people to carry out their transactions during the non-peak hours. In the past 10 years, the bank has witnessed a growth of 200% in its assets. The finances are so strong that the bank is expected to increase its dividends in the coming years; hence investors will get to gain a good sum if they invest in the stock right now. The share price movement of the bank for the last year is seen below:
Reasonable growth in loans and deposits
The next bank that pays out reasonable dividends is the US Bancorp (USB, Financial). At present, the dividend yield of the bank is 2.2% and the pay-out ratio is just about 32%, which denotes that the bank has a big window to increase its pay-outs in the future. One of the most important reasons as to why this bank features in the list is because of its impressive performance during the fourth quarter of 2014. The deposits and loans of the bank grew by 7.2% and 5.9% respectively. By the year 2016, the bank is expected to grow its earnings by 16%. Currently, the US Bank, with an efficiency ratio of 53%, 14.7% return on equity and 1.54% return on assets is one of the fastest-growing banks in the USA. This bank is currently the best stock for investors who are looking for stable income without any major exposure to risks. The movement of share prices of the bank for the last few months is as follows:
Keeping it simple
One of the best dividend stocks in the banking sector that you can rely on, during all times is Wells Fargo (WFC, Financial). The main reason for the success of the bank is that it doesn’t hold any fancy investments in the stock markets or other risky propositions. On the other hand, the bank’s business only runs only on simple instruments like loans, credit cards, insurance and all kinds of brokerage. Through this, the bank not only offers safety of operations for its customers but also stands to gain a lot due to the diverse products and services it offers. With a dividend yield of 2.5% and a 16% growth expected by 2016, Wells Fargo is one of the most efficient banks in this sector. The trend of share prices for the past year is as follows:
Conclusion
If you are looking for good returns from the banking sector, these stocks are the best bets for you. You will not only be treated to stable returns every year, but you will also be introduced to a wide gamut of services offered by these banks. With the current volatility of the stock market, investors can prudently invest in these stocks to gain a good cover against the market risks and fluctuations.
