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Top Financials Blew Out Q2 Earnings Last Friday: 6 Banks That Pay Huge Dividends May Do the Same This Week
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The second-quarter earnings reporting season got off to a solid start on Friday, as Citigroup, JPMorgan, Wells Fargo and BlackRock all came in with results featuring better-than-expected revenues. The positive results could bode well for others in a sector that has struggled this year. Due to the implosion and failure of Silicon Valley Bank and others earlier this year, investors (especially institutional accounts) did what investors often do; they shot first and asked questions later, fearing a wide contagion in the banking industry.
While there is still a wary eye on Wall Street toward many of the top banks, even those with larger market capitalizations, the reality is there could be some huge total-return winners to grab before they report. Six top companies hit our 24/7 Wall St. financial services database screens, and all offer oversized dividends, are Buy rated and have yet to report earnings, but all should later this week.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Ally Financial
The bank with no buildings may be poised to have a strong second half of 2023. Ally Financial Inc. (NYSE: ALLY) is a digital financial services company that provides various digital financial products and services to consumer, commercial and corporate customers primarily in the United States and Canada. It was formerly known as GMAC and changed its name in May 2010.
Its Automotive Finance Operations segment offers automotive financing services, including providing retail installment sales contracts, loans and operating leases, term loans to dealers, financing dealer floor plans and other lines of credit to dealers, warehouse lines to automotive retailers and fleet financing. It also provides financing services to companies and municipalities for the purchase or lease of vehicles and vehicle-remarketing services.
The Insurance Operations segment offers consumer finance protection and insurance products through the automotive dealer channel and commercial insurance products directly to dealers. This segment provides vehicle service and maintenance contracts and guaranteed asset protection products, and it underwrites commercial insurance coverages, which primarily insure dealers’ vehicle inventory.
The Mortgage Finance Operations segment manages consumer mortgage loan portfolio that includes bulk purchases of jumbo and low-to-moderate income mortgage loans originated by third parties, as well as direct-to-consumer mortgage offerings.
The Corporate Finance Operations segment provides senior secured leveraged cash flow and asset-based loans to middle market companies, leveraged loans and commercial real estate products to serve companies in the health care industry. The company also offers commercial banking products and services. In addition, it provides securities brokerage and investment advisory services.
Investors receive a 4.37% dividend. Goldman Sachs has a $35 target price on Ally Financial stock. The consensus target is $31.39, and the stock closed on Friday at $27.49. The bank is scheduled to report on July 19.
24/7 Wall St.Bank of America
Warren Buffett owns a stunning one billion shares of this bank. 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.
Bank of America has expanded into several 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 3.02% dividend. Oppenheimer’s $53 target price is well above the $35.22 consensus price target for Bank of America stock. The shares closed on Friday at $29.11. The company is expected to post results on July 28.
KeyCorp
Shares of this top regional player are quite cheap at current levels for investors looking at financials. KeyCorp (NYSE: KEY) operates as the bank holding company for KeyBank National Association, which provides deposit, lending, cash management and investment services to individuals, small and medium-sized businesses.
KeyCorp also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets banner.
KeyCorp stock comes with an 8.07% dividend. The Wells Fargo price target is $17. The consensus target is lower at $12.29, and the shares closed at $10.16 on Friday. Look for the report on July 20.
Regions Financial
This stock does a ton of business in the fast-growing southern and southeastern parts of the country. Regions Financial Corp. (NYSE: RF) provides banking and bank-related services to individual and corporate customers. It operates through three segments.
The Corporate Bank segment offers commercial banking services, such as commercial and industrial, commercial real estate and investor real estate lending; equipment lease financing; deposit products; and securities underwriting and placement, loan syndication and placement, foreign exchange, derivatives, merger and acquisition, and other advisory services. It serves corporate, middle market and commercial real estate developers and investors.
The Consumer Bank segment provides consumer banking products and services related to residential first mortgages, home equity lines and loans, branch small business and indirect loans, consumer credit cards and other consumer loans, as well as deposits.
The Wealth Management segment offers credit-related products and retirement and savings solutions, as well as trust and investment management, asset management and estate planning services to individuals, businesses, governmental institutions and nonprofit entities. It also provides investment and insurance products, low-income housing tax credit corporate fund syndication services and other specialty financing services.
The dividend yield is 4.22%. Morgan Stanley’s $25 target price compares with the $21.08 consensus target, and Regions Financial stock ended Friday at $18.95 a share. The bank is set to report on July 21.
Truist Financial
This company was created through a merger of SunTrust Bank and BB&T in 2019. Truist Financial Corp. (NYSE: TFC) provides banking and trust services in the southeastern and mid-Atlantic United States. Its deposit products include non-interest-bearing checking, interest-bearing checking, savings and money market deposit accounts, as well as certificates of deposit and individual retirement accounts.
Truist also provides funding; asset management; automobile lending; bankcard lending; consumer finance; home equity and mortgage lending; insurance, such as property and casualty, life, health, employee benefits, workers compensation and professional liability, surety coverage, title, and other insurance products; investment brokerage; mobile/online banking; and payment, lease financing, small business lending, and wealth management/private banking services.
In addition, Truist offers association, capital market, institutional trust, insurance premium and commercial finance, international banking, leasing, merchant, commercial deposit and treasury, government finance, commercial middle market lending, small business and student lending, floor plan and commercial mortgage lending, mortgage warehouse lending, private equity investment, real estate lending and supply chain financing services. It provides corporate and investment banking, retail and wholesale brokerage, securities underwriting and investment advisory services.
Truist Financial stock investors receive a 6.28% dividend. The $36 Raymond James price target is less than the consensus target of $37.19. The stock closed on Friday at $33.10, and the bank is scheduled to report on July 20.
U.S. Bancorp
This top super-regional bank is among the higher-paying dividend bank stocks. U.S. Bancorp (NYSE: USB) provides various financial services to individuals, businesses, institutional organizations, governmental entities and other financial institutions in the United States.
The company offers depository services, including checking accounts, savings accounts and time certificate contracts; lending services, such as traditional credit products; and credit card services, lease financing and import/export trade, asset-backed lending, agricultural finance and other products. It also provides ancillary services comprising capital markets, treasury management and receivable lock-box collection services to corporate customers; and a range of asset management and fiduciary services for individuals, estates, foundations, business corporations and charitable organizations.
In addition, U.S. Bancorp offers investment and insurance products to its customers principally within its markets, as well as fund administration services to a range of mutual and other funds. The company also provides corporate and purchasing card and corporate trust services, and merchant processing services, as well as cash and investment management, ATM processing, mortgage banking and brokerage and leasing services.
Shareholders receive a 5.43% dividend. BofA Securities upgraded U.S. Bancorp stock to a Buy rating last week. Its $40 target price is less than the $42.36 consensus figure, but the stock closed at $35.33 on Friday. Expect to see the results on July 20.
Note that it is possible some of these banks have to trim their dividends, but since they have exploded so high due to panic selling, even with a cut, they will still be well above most companies. With earnings for the quarter for these stocks scheduled this week, some solid prints and positive forward guidance could launch them considerably higher.
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