Best bank stocks for 2021: earnings season boost


As JPMorgan, Goldman Sachs, Wells Fargo, Bank of America and Citigroup share their first quarter results this week, let’s see whether investment in the banking sector could become an attractive opportunity right now. That’s because bank stocks are a diverse group of equities with upsides and downsides for investors. For example, JPMorgan’s dividends have increased every year since 2010. Fast forward to 2020, and it paid $3.60 in dividends for an 1,800% increase.

To skip our detailed analysis of the banking industry, you can go directly to see the 5 Best Bank Stocks To Buy For Long-Term. Bank stocks are fractional ownership shares of financial institutions that hold and lend money. There are a few different ways to categorize bank stocks, such as the size of the bank or its core business.

  • In particular, the company’s asset management and investment banking segments reported strong numbers.
  • Many or all of the products featured here are from our partners who compensate us.
  • The company has bank branches in Canada and the United States and has global operations.
  • Silvergate Capital (SI 4.54%) is not a traditional bank, in that it really operates in the crypto space.
  • WFC offers individual, small business and commercial banking through its thousands of bank branches.

In a highly volatile market like we’re experiencing now – especially on bonds – traders, especially fixed-income trading groups, can create additional revenue sources to offset any slowdown in loan demand. In addition to the demand for customized investment strategies, impacts of sustainable investments increased 78% during 2021, and UBS managed assets increased to $214B. It’s a great business model because the fees for alternatives can be exorbitant (e.g., 2% management fee plus 20% carried interest, etc.). These fees can offset potential declines in lending that we discussed above. In addition, these financials can generate revenue from trading activities. In particular, the company’s asset management and investment banking segments reported strong numbers.

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Although it had a torrent run in 2021 and the start of 2022, analysts see this bank cooling down in 2023. Many other options on this list are expected to post much higher earnings growth. Before the significant correction in Canadian financials, CIBC was one of the best-performing bank stocks in the country.

This will cause banks to make more money from lending out money and increase their profits. S. Bancorp is primarily a consumer-facing operation that sells personal finance products. Like many other large global banks, the Royal Bank of Canada balances retail services with investing and capital markets services. In this article, we discuss 12 best bank dividend stocks to buy now. You can skip our detailed analysis of the banking sector and its outlook, and go directly to read 5 Best Bank Dividend Stocks to Buy Now.

Publicly Traded Company

JPMorgan Chase is the largest bank in both the United States and in the world by market capitalization. Named after John Pierpoint Morgan, a famous 19th-century banker and financier, the New York City-based company has played a leading role in shaping the U.S. and global financial industry. Intercontinental Exchange is a member of the Morningstar Wide Moat Focus Index, which has outperformed U.S. stocks over time. ICE has also been one of the best financial stocks in terms of price performance, boasting an average annual total return of 14.4% over the past 15 years vs an 11.0% return for the S&P 500. The current market volatility and rising interest rates have boosted exchange revenue as trading volume increased in certain products. However, they have also held down the mortgage business as demand softened.

This was after it announced its full-year earnings, growing on almost all business avenues, from its net income to diluted share prices-all improved compared to last year. We’ve rounded up some of the best review: investing in the next big thing bank stocks on the market right now. While they can fluctuate in the short term depending on the broader performance of the market, they have the potential for very strong returns in the long term.

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CFRA has a “buy” rating and a $52 price target for WFC stock, which closed at $48.89 on Dec. 14. Headquartered in Charlotte, N.C., Bank of America is the second largest bank in the U.S. Like JPM, it offers commercial banking services to individuals and small businesses as well as investment banking. During the financial crisis of 2008, Bank of America purchased the investment bank Merrill Lynch, which it now uses to run wealth management services. Bank of America is headquartered in Charlotte, North Carolina, and is a multinational investment bank and financial services holding company. Its net revenue was down slightly in 2020 compared to 2019 but was still just over $85 billion.

Also worth noting, CIBC also boasts the largest dividend yield on this list, in the low 6% range. Typically, CIBC sports one of the highest yields among its peers, and this time is no different. In terms of valuation, this company has typically traded in the 10.2x range in terms of price to earnings over the last half-decade. At the time of writing, it’s currently trading at a single digit premium to that valuation.

CFRA has a “buy” rating and a $51 price target for BAC stock, which closed at $44.12 on Dec. 14. Be aware of the risks before investing, and consider the overall outlook for a financial company (not just one or two metrics) when conducting your analysis. Also, remember that financial sector stocks are best suited as long-term investment vehicles. There are many factors that can influence bank stocks over shorter time periods that are very unpredictable. As for financial sector exchange-traded funds (ETFs), the Vanguard Financials ETF (VFH -0.03%) may be an excellent choice.

“Given the macro uncertainty and likely continued market volatility, we think investors will have greater appreciation for the defensive earnings profile of the exchanges,” according to a recent note from Deutsche Bank. Intercontinental Exchange (ICE, $113.16) is the parent of the venerable New York Stock Exchange (NYSE), the New York Board of Trade and the Chicago Stock Exchange, among other institutions. It operates a total of 10 exchanges and six clearing houses around the world. The analyst expects Equifax to expand its income verification services to auto, card, government services, and employment screening. Morningstar calls these wide-moat stocks “very rare,” as they are the “cream of the crop in terms of the quality and durability of their business models.” Investors seeking out the best financial stocks will want to tread carefully, focusing on high-quality names with solid fundamentals.

Bank of America Corporation (NYSE:BAC)

Before the COVID-19 pandemic, Etsy was growing nicely by connecting craft makers with customers looking for something a bit more out of the ordinary than mainstream e-commerce fare. But Etsy absolutely skyrocketed, growing at more than twice the rate of overall e-commerce. The modus operandi observed is that once a client pays amount to them, huge profits are shown in his account online inducing more investment.

It operates a fast-growing payments platform called Mercado Pago, a logistics service known as Mercado Envios, a business lending platform, and more. Recent results show that Pinterest’s growth has resumed, with the user base growing by 8% year over year to activ trades review 465 million in the second quarter of 2023. There’s still lots of long-term user growth potential, and management recently said that growth is re-accelerating. As the pandemic and its accompanying e-commerce surge have cooled off, so has Etsy’s momentum.

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Investors can leverage the cyclical nature of these stocks for a strong return. Its most recent earnings report showed growth in both net revenue and earnings. USB’s share price has rebounded and, it managed to keep its dividend up at 3.34 percent.

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For example, many banks offer safe deposit boxes for lease to their customers, and some make money through partnerships with third-party companies. However, at their core, these are the main ways that banks make their money. “The banks are all over the place this earnings season, which just goes to show the importance of individual stock picking,” the “Mad Money” host said.

Financial stock FAQs

Once a company that grew the dividend at a rapid pace, it has slowed to mid single digit growth, despite its dividend payout ratio being extremely low. Once the economy picks back up again, I’d expect the dividend growth at Goeasy to pick up as well. However, Scotiabank and CIBC are relatively close, typically only being 0.3%-0.4% off of each other in terms of yield. So by the time you’re reading this article, things could have changed. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.

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