The difficult business and regulatory environment has made it difficult for financial companies to pay strong dividend yields. Evidence of the dividend struggle for the group can be seen by looking at the most popular financial stock ETF: Financial Select Sector SPDR Fund (XLF). XLF pays a dividend of only 1.62%, well below the 2.37% dividend the Dow Jones Industrial Average (DIA) offers.
The lack of a dividend yield has helped contribute to the weak performance in financial shares over the past three years. With dividends becoming increasingly more important, investors should consider financial stocks that pay dividends ahead of financial stocks that do not pay dividends. This article lists the top dividend payers in each sub sector of the financial sector.
JP Morgan Chase (JPM) Yield: 2.86%
HSBC Corp (HBC) Yield: 4.50%
PNC Financial Corp (PNC) Yield: 2.29%
Huntington Bankshares Inc (HBAN) Yield: 2.67%
First Niagara Financial Group (FNFG) Yield: 6.76%
Valley National Bankcorp (VLY) Yield: 5.34%
New York Community Bankcorp Inc (NYB) Yield: 7.63%
Firstmerit Corp (FMER) Yield: 3.93%
Preferred Shares (discussed more here.)
Power Shares Financial Preferred Portfolio (PGF) Yield: 7.23%
While the financial sector as a whole is not a good dividend payer, there are individual financial stocks that offer significantly better dividends than their peers. The stocks mentioned in this article serve as good ways to bet on the financial sector while generating some income.