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Will Bank Stocks Make a Comeback Soon? Here are 3 Banks to Keep an Eye On in 2023

Published 03/09/2023, 09:08 AM
Updated 07/09/2023, 06:31 AM
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So far, we have seen turbulent waters this week when it comes to bank stocks, but will they make a comeback soon?  

In today's market analysis, part of my continuing series called investing ideas for the technology generation, I go over 3 US large bank stocks to potentially keep an eye on, as the end of the first quarter approaches in a few weeks along with the first round of quarterly results for 2023!

They are:  Morgan Stanley (NYSE:MS), JPMorgan Chase (NYSE:JPM), and Bank of New York Mellon (NYSE:BK).  

I will discuss their most recent dividend yields & quarterly results.

Morgan Stanley

This bank, which sits among the top 10 in the US, shows its most recent dividend yield at 3.23%, paying $0.77 per share. 

In their most recent Q4 results, they saw $12.7B in revenue, down from the same quarter a year ago, along with net income of $2.2B, also down from the same quarter in the prior year.

What's interesting to note about this firm is that it remains balanced across 3 key segments: institutional securities, wealth management, and investment management, without the same level of exposure to traditional consumer banking as some of its big-bank peers in the US.  Just their wealth management segment alone posted $6.6B in revenue in Q4, up from prior year results.

This is a stock for an investor to possibly keep an eye on due to its potential for steady quarterly dividend income.

JPMorgan Chase

The bank listed by Wikipedia as the biggest in the US is always one to look out for simply due to the sheer impact it has on the overall banking sector.

It's current dividend yield is 2.9%, with a quarterly dividend of $1 per share.

In the bank's Q4 2022 results, they boasted $35.6B in revenue, up 17% from that quarter in the prior year, along with net income of $11B, up 6% from the prior year's fourth quarter.

This firm's business is spread across consumer banking, corporate & investment banking, commercial banking, asset & wealth management.

To many Americans like myself, Chase is a well-known banking brand with a large network of branches across the country, so its consumer business is already well entrenched I would say.

One item from its Q4 results is a 9% increase in debit & credit card sales volume.  

Will consumers continue to spend on products & services at the same level going into Q2?  That remains to be seen.

However, at a dividend yield just under 3%, this bank stock is one to possibly take a closer look at, for investors looking for stocks that generate dividend income.

Bank of New York Mellon 

Bank of New York Mellon, the oldest continually operating bank in the US that has its origins a few hundred years ago in New York City and previously known simply as the Bank of New York, currently offers a 2.97% dividend yield, with a dividend payout of $0.37 per share.

This bank, which does not operating a consumer banking segment like Chase and others do, is balanced across the following business segments:  securities services, market & wealth services, investment and wealth management.

It's Q4 results show an adjusted revenue of $4.38B, up 9% vs Q4 2021, however a 38% drop in net income.

What's notable to point out is the CEO commentary which mentions the firm continuing to derive benefit from higher interest rates.  In fact, in Q4 the firm saw $1.05B in net interest revenue!

As in the other two bank stocks mentioned, this could be one to keep an eye one for having a dividend yield near 3% or better, if dividend income is part of your investing strategy.

It will be interesting to see how the current interest rate environment continues to benefit this bank, in its next quarterly results.

Closing Thoughts

The focus of today's market analysis was looking at three large US-based bank stocks with a dividend yield of close to 3% or better.  

Though dividend income is not a strategy for many investors, for others it is.. due to the potential for steady income generation each quarter, to achieve steady return on capital, at a generally much higher yield than received from savings accounts. 

In 2023, for home-based & online traders it is as simple as a few clicks to own a dividend-paying stock, but also to track quarterly dividend payouts from the convenience of your laptop or mobile device.

That could be one indicator of a bank's overall financial health & strength, is its ability to pay out dividends each quarter to shareholders.  In addition, with Fed Chairman Powell's sentiment this week indicating possibility for continued interest rate hikes to tame inflation, investors in bank stocks are eager to see what impact that will have on those banks in 2023.

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Disclaimer:  The author does not hold any of the mentioned companies, directly or via his firm Albert Anthony & Company, nor is currently affiliated with any names mentioned.  This market analysis is for informational & educational purposes only and not to be considered a recommendation to invest in a particular asset or asset class, or to be considered advisory services from a registered financial advisor.

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