When it comes to dividend, bank dividend stocks are a great option. Not only do they pay substantial dividends, but they also tend to be stable and safe investments.
The banking sector plays a key role in economy and financial stability. In general, the sector’s performance depends on economic conditions. When the demand for loan is high, the unemployment rate is low, economic activity is high, the banking sector engages in great circumstances to run the business effectively. However, the sector may underperform during turbulent times in the economy.
Drawing the conclusion from financial crisis of 2008 with its uncertainties, the European banking sector has been strengthened in terms of stability and resilience.
Moreover, the recent quarters confirmed the sector’s resilience during the pandemic, the European banks hold strong capital and liquidity positions.
The escalation of military conflict in Ukraine has a strong negative impact on inflation, economic forecast and on the overall predictability of energy supply in Europe.
Moreover, the interest rates have been dynamically increased by the national banks across Europe in recent months. As a result, this could potentially lead to outsized earnings growth for bank stocks over the next few years. The rising interest rates will hit indebted households while they are already struggling under inflation. So this will expectedly slow down the lending and increase the possibility on loan defaults.
But, the banking sector has significantly better capital and liquidity positions compared to the situation of financial crisis in 2008, among others that’s why the sector remained stable and resilient during these challenging times.
Following the escalation of military conflict, bank share prices began to fall, creating an opportunity for high returns in this sector. For those who prefer a long-term approach to investing, bank dividend stocks are a great option to consider. It has compiled a list of compelling choices using Yahoo Finance Stock Screener.
| Ticker | Company | Market cap | Sector | Industry |
|---|---|---|---|---|
| LSE BARC | Barclays PLC | US$31,0 billion | Financial service | Bank |
| LSE NWG | NatWest Group plc | US$28,1 billion | Financial service | Bank |
| OMXSTO SHB-A.ST | Svenska Handelsbanken AB | US$17,3 billion | Financial service | Bank |
| EURONEXT OSLO DNB | DNB Bank ASA | US$29,1 billion | Financial service | Bank |
| LSE LLOY | Lloyds Banking Group plc | US$35,6 billion | Financial service | Bank |
Source: Yahoo Finance database
TOP 5 European bank dividend stocks
5. Barclays PLC (Ticker LSE BARC) – U.K.
Market capitalization: GBP 25,8 billion (US$31,0 billion), forward annual dividend yield: 3,80%, P/E 4,45
Barclays Plc operates as a bank holding company which provides various financial products and services including retail banking, credit cards, corporate and investment banking and wealth management services in the United Kingdom and in over 40 countries. Furthermore, it is one of the largest bank in Europe by total assets and is a constituent of the FTSE 100 Index and has secondary listing on the New York Stock Exchange. Barclays has more than 4,500+ branches in about 55 countries from which about 1,600 are in the United Kingdom. It is one of the oldest bank in Europe with year of foundation 1690. Headquarter: London.
There are typically 2 dividends per year in Q1 and Q3. 4 Year Average Dividend Yield: 2,4%
1. Lloyds Banking Group plc (Ticker LSE LLOY) – U.K.
Market capitalization: GBP 29,6 billion (US$35,6 billion), forward annual dividend yield: 5,94%, P/E 6,18
Lloyds Banking Group plc, together with its subsidiaries, is a financial services company, which engages in the provision of a wide range of banking and financial services. Additionally, it is one of the “Big Four” clearing banks in Great Britain. Lloyds Bank operates through three segments: Retail; Commercial Banking; and Insurance and Wealth. Furthermore, it is one of the UK’s largest financial service organizations, with 30 million+ customers and 65,000+ employees. It was founded in 1765 and is headquartered in London.
There are typically 2 dividend per year in Q2 and Q3. 4 Year Average Dividend Yield: 3,1%