If you are an energy investor, you would have to think there is nothing worse than being in energy stocks. Hold your horses though, as the bank stocks as measured by the Nasdaq Bank Index (BKX) are down a stunning 16.3% since the beginning of the year. Many of the stocks in that index are blue chip leaders that have been absolutely destroyed. In fact, a new RBC research report maintains that bank valuations haven’t been this attractive in five years.

RBC acknowledges the multitude of reasons why banks have been crushed, not the least of which is the fact that the Federal Reserve looks pinned in, and it’s very possible we could have just one, or possibly no, interest rate increase the rest of 2016. That combined with worries of European banks, a weakening Chinese economy and the continuing struggles in the energy sector, all have contributed to the sell-off.

RBC notes that positive factors like loan growth, the healthier U.S. economy, strong credit quality and increased mergers and acquisitions activity, make the buying opportunity even more significant. We screened the RBC bank research universe and found four top banks paying good dividends rated Outperform to buy now.

JPMorgan

This stock trades at a very low 9.65 times estimated 2016 forward earnings. JPMorgan Chase & Co. (NYSE: JPM) is expected to benefit from commercial loan growth and an upturn in capital spending. Wall Street analysts agree that the stock seems attractively valued on estimated price-to-earnings (P/E) ratio and a very solid price-to-book value. Some on Wall Street have cautioned that last year’s divestiture of the physical commodities business could provide an earnings headwind throughout this year.

Improvement in loan growth, terrific equity capital markets and a steady increase in deposits are a solid plus. Trading at a discount to many of the large cap banks on 2015 earnings estimates helps upside potential as well. With $2.6 trillion in assets on a worldwide basis, and one of Wall Street’s savviest leaders in Jamie Dimon, the stock is a solid buy for investors.

Dimon also recently put his money where his mouth was, reportedly buying a stunning 500,000 shares of the stock for a massive $26 million. It brings his total holdings in the bank to 6.7 million shares, worth over $360 million.

JPMorgan investors receive a 3% dividend. The RBC price target for the stock is $72, and the Thomson/First Call consensus price target is $72.22. Shares closed on Wednesday at $58.77.

PNC Financial Services

This top regional bank stock is down well over 10% in the past month. PNC Financial Services Group Inc. (NYSE: PNC) is one of the largest U.S. diversified financial services organizations, providing retail and business banking; residential mortgage banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; and wealth management and asset management. With consistent earnings growth and a very positive and growing loan portfolio, the company is a premiere super-regional bank stock to own.

Wall Street analysts point to numerous positives, including the bank implementing huge cost savings plans. PNC is also applauded for outstanding credit/risk management and the limited exposure to the capital markets related areas, while focusing on traditional banking. RBC cites the banks impressive Basel III common equity tier 1 ratio of 10.0% for the fourth quarter of 2015, which well exceeds the 8.5% level that the firm feels the company needs to run a conservative but very profitable bank.

PNC shareholders receive a 2.43% dividend. The $105 RBC price target is higher than the consensus target of $97.63. Shares closed Wednesday at $84.06.
U.S. Bancorp

This is another top super-regional bank that RBC favors for 2016. U.S. Bancorp (NYSE: USB) had $419 billion in assets as of June 30, 2015, and it is the parent company of U.S. Bank National Association, the fifth largest commercial bank in the United States. The company operates 3,164 banking offices in 25 states and 5,020 ATMs, and it provides a comprehensive line of banking, investment, mortgage, trust and payment services products to consumers, businesses and institutions.

The bank has underperformed other larger regional banks over concerns about lower revenue and higher expenses. Many on Wall Street like the fact that USB has no meaningful capital markets exposure and has among the best risk management/credit profile in the industry, and it generates among the highest returns of peers.

RBC points out that fee income represents a whopping 45% of total revenue, spread over four separate business silos, providing a strong overall base. The diversity of business lines/revenue streams is expected to drive strong through-the-cycle performance, and the analysts expect overall loan growth in the range of 4% to 6% year over year.

Investors receive a 2.55% dividend. RBC has a $46 price target, and the consensus price objective is $45.43. Shares closed most recently at $40.12.

Wells Fargo

This is another stock for investors to look at now for safety, dividends and solid upside potential. Wells Fargo & Co. (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.8 trillion in assets. It provides banking, insurance, investments, mortgage and consumer and commercial finance through 8,700 locations, 12,800 ATMs, the Internet and mobile banking, and it has offices in 36 countries to support customers who conduct business in the global economy. Wells Fargo serves one in three households in the United States.

Wells Fargo slowly but surely has become one of the biggest mortgage lending companies in the United States, in addition to its normal banking and brokerage businesses. A continued increase in commercial real estate lending could really boost the bank’s bottom line and overall revenue. The stock also remains a top Warren Buffett holding.

Wall Street likes the stability, yield and some asset sensitivity that the bank offers, and investors looking to add financials to their portfolio could do well buying shares. The bank has little exposure outside of the United States, and 2016 could end up being a transitional year with slower earnings growth and expenses running higher due to the GE acquisitions and tech and cyber upgrades. RBC likes the shareholder-driven management team and the coast-to-coast franchise exposure the bank provides.

Shareholders are paid a 3.12% dividend. The RBC price target is posted at $60. The consensus target is $57.37. Shares closed Wednesday at $48.13.

These top bank stocks provide very solid total return potential. More conservative accounts looking to add new positions would be well served buying any of these for the rest of 2016 and beyond.

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