Some stock market participants are on pins and needles as interest rates have edged higher. While a huge increase would be dangerous for some sectors, the reality is the Federal Reserve will probably not raise interest rates much for another year or even two. Plus, note that while rates have come up from generational lows, the benchmark 10-year Treasury bond still has a lower yield than the S&P 500. At a 1.39% handle, that shouldn’t crimp corporate or retail borrowing activity.

The banking industry loves rising interest rates, as interest rates and bank profitability are connected, with banks benefiting from higher rates. When interest rates are higher, banks make more money, by taking advantage of the difference between the interest banks pay to customers and the interest the bank can earn by investing the deposits.

We screened our 24/7 Wall St. research database looking for banks stocks rated Buy that also pay solid and dependable dividends. When you combine the positive of rising interest rates and an opening and improving economy, the banking industry could be poised for some outsized total return. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Bank of America

This bank posted solid fourth-quarter results. Bank of America Corp. (NYSE: BAC) is a ubiquitous presence in the United States, providing various banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, corporations and governments in the United States and internationally. It operates 5,100 banking centers, 16,300 ATMs, call centers and online and mobile banking platforms.

The bank has expanded into a number of new U.S. markets, with scale across the country positioning it ideally to benefit from accelerating loan growth over the next two years. Moreover, unlike smaller peers, scale allows the bank to increase investment substantially over the next few years without notably jeopardizing returns, driving further market share gains.

Shareholders receive a 1.98% dividend. Atlantic Equities has a $40 price target for the shares, while the Wall Street consensus target is $36.33. Bank of America stock closed on Wednesday at $36.38 per share.

Citigroup

Shares of this top bank have rallied well off the 2020 lows and look poised to move higher in the rest of 2021. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations, governments a broad range of financial products and services.

Citigroup offers services such as consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. It operates and does business in more than 160 countries and jurisdictions.

Trading at a still very cheap 9.9 times estimated 2021 earnings, this stock looks very reasonable in what remains a volatile stock market and in a sector that has lagged dramatically.

Investors receive a 3.06% dividend. The D.A. Davidson price target is $84, and the target is $79.08. Citigroup stock closed at $68.60 on Wednesday.

This stock trades at a still reasonable 14.5 times estimated 2021 earnings. JPMorgan Chase & Co. (NYSE: JPM) is one of the leading global financial services firms and one of the largest banking institutions in the United States, with about $2.6 trillion in assets. The company as it is today was formed through the merger of retail bank Chase Manhattan and investment bank J.P. Morgan.

The firm has many operating divisions, including investment and corporate banking, asset management, retail financial services, commercial banking, credit cards and financial transaction services.

Top analysts feel that this industry titan faces a broad recovery in nearly every aspect:

1. Leading M&A advisory and capital markets product set and market share
2. Massive footprint of corporate and commercial banking customers
3. Sizable wholesale payments businesses

The company has proven that it has the wherewithal to invest continually in people, products and platforms to further its market share base, extending its competitive advantage compared with most of its peers.

Holders of JPMorgan stock receive a 2.35% dividend. The $172 Barclays price target is a Wall Street high. The consensus price target is $147.68, and the stock ended Wednesday’s trading at $153.26 per share.

Wells Fargo

This large-cap bank is perhaps the best solid value play for 2021. Wells Fargo & Co. (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.8 trillion in assets. The company provides banking, insurance, investments, mortgage and consumer and commercial finance through 8,700 locations, 12,800 ATMs, the Internet and mobile banking. It also 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.

Bloomberg reported recently the Federal Reserve has privately signaled that it accepted the bank’s proposal for overhauling risk management and governance. The next steps to remove asset cap include the completion of a third-party review and a full Fed board vote to lift the sanction. This is a huge positive for the bank and for shareholders.

Investors receive a small 1.08% dividend. Credit Suisse has set its price target at $40. The posted consensus target is $38.38, and Wells Fargo stock closed most recently at $38.29 a share.

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These four top money center banks all make sense for growth stock investors looking for a dividend kicker to add the potential for a solid 2021 total return. With earnings out of the way, they still look very attractive. While they have moved higher recently, the value remains.

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