With Banks Down a Sharp 20%, 4 Top Dividend Stocks to Buy Now

Banking, finance, and taxes

Published: March 7, 2016 9:45 am

Last Updated: January 13, 2020 12:18 pm

It seems hard to believe, but since the highs that were posted last summer, the bank stocks as a whole are down a stunning 20%, which is more than two times the loss that the S&P 500 put in. The question for investors looking at the group is whether this is a bottom or they have farther to fall. With worries about a slowing economy, harsh election year political rhetoric and weakening capital markets, some are still steering clear.

A new Deutsche Bank research report touches on all the above-mentioned concerns and numerous others, not the least of which is the fallout from bad energy loans, which could be around for years. However, the firm does have bank stocks in its research universe that are rated Buy. We found four that look very attractive now.

Bank of America

This company has continued a methodical march back to financial health and is a true big money center bank to make the list at Deutsche Bank. Bank of America Corp. (NYSE: BAC) is the fifth largest bank in the world by market capitalization, and it is a ubiquitous presence in the United States. The Merrill Lynch brokerage arm has continued to supply the bank with outstanding revenues and growth.

The company provides 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. Operating 5,100 banking centers, 16,300 ATMs, call centers, online and mobile banking platforms, the company continues to open new markets and expand share, which Jefferies feels it excels in.

CEO Brian Moynihan has met numerous times over the past year with Wall Street and many analysts came away feeling good about the overall outlook for the bank. With the potential for strong commercial lending and credit card originations, and trading at 9.4 times 2016 estimated earnings, the stock makes good sense now. Deutsche Bank cites the bank’s good expense management, loan growth and the valuation as positives.

Bank of America investors receive a 1.48% dividend. The Deutsche Bank price target for the stock is $17, and the Thomson/First Call consensus target is $17.45 The stock closed on Friday at $13.54.