Banking & Finance

Top Analyst Raises Price Targets on 4 High Dividend-Paying Bank Stocks

KeyCorp

This is another top bank that makes good sense for investors for the rest of 2020. 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.

The company 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.

Investors receive a 5.64% dividend, which the bank already has said will remain intact. The $13 Jefferies target price was raised to $15, while the consensus target is $13.83. KeyCorp stock closed at $13.12 on Friday.

Regions Financial

Many investors are familiar with this larger regional banking play. Regions Financial Corp. (NYSE: RF) is one of the nation’s largest full-service providers of consumer and commercial banking, wealth management, mortgage and insurance products and services. It serves customers across the South, Midwest and Texas, and through its subsidiary, Regions Bank, operates approximately 1,500 banking offices and 1,900 ATMs.

The company’s lending portfolio focuses primarily on residential mortgages, home equity, commercial mortgage and commercial and industrial loans. These short-term loans may have an interest rate based on the LIBOR rate or prime rate and are secured by collateral owned by the business requesting the loan.

Investors receive a 4.85% dividend. Jefferies team raised its $12 price target to $15, above the $13.29 consensus target. Regions Financial stock ended last week at $12.79 per share.

Truist Financial

This seemingly off-the-radar company makes great sense for investors looking for a solid regional winner. Truist Financial Corp. (NYSE: TFC) is a bank holding company, incorporated in North Carolina and headquartered in Charlotte. The company was formerly known as BB&T, but it changed its name in December 2019 upon the acquisition of SunTrust Banks.

The complete transition to the Truist brand is expected to take about two years. Until then, customers of both BB&T and SunTrust will be served through their respective bank branches using the same apps, websites and services as before the merger closed. As part of the regulatory approval process, the new company will sell off 30 SunTrust branches in North Carolina, Virginia and Georgia to First Horizon Bank and divest $2.4 billion in deposits to “mitigate the competitive effects of the merger,” according to the Federal Reserve.

Truist’s footprint is located in one of the strongest and fastest-growing regions of the United States, and the analysts expect the company to maintain a competitive advantage over many of its competitors headquartered outside its footprint due to its being physically located in the southeast part of the country.

Investors receive a 4.17% dividend. Jefferies raised the price target to $48 from $41. The posted consensus target is $44.73, and Truist Financial stock closed most recently at $43.32.


The analysts only have one major money center bank to go along with three targeted regional plays, all of which are in high growth areas of the United States. Note that this remains a contrarian play and interest in the sector may take time. In addition, with third-quarter earnings reports for banks starting soon, things could get volatile.