Are Bank Stocks Slept On?

Bank stocks may seem like your grandpa's investment - stable, traditional, and honestly kind of boring. But in 2024, these old school blue chips are suddenly looking downright cool again, with many major bank stocks up between 30% and nearly 50% on the year.

Turns out banks aren't so behind the times after all. While the world was distracted by crypto and meme stocks, banking quietly adapted to the new environment and came roaring back. So maybe it's time to reconsider the perception of bank stocks as outdated investments. Their impressive rebound reveals an underrated resilience and growth potential that is counterintuitive in the current market.

You Should Look at Bank Stocks as Inflation Hedges

As effective inflation hedges, bank stocks benefit from rising interest rates as their lending income increases. This year's high inflation has been good for banks. Fifth Third Bancorp (FITB) and KeyCorp (KEY) have surged 54.18% and 53.85% respectively in 2024, showing bank stocks can still deliver growth in the right conditions.

In addition to capital appreciation, banks provide the gift that keeps on giving in the form of consistent dividends. Most major banks have maintained or even grown their dividend payouts despite market volatility. Their stability and strict regulation ensure reliable dividend income to offset inflation.

Bank Stocks Are Great Swing Trades

The cyclical nature of bank stocks gives ample opportunities to exploit market volatility through swing trading. For example, the rebound after the collapse of Silicon Valley Bank allowed nimble traders to profit from the recovery of regional banks like New York Community Bancorp (NYCB).

High trading volumes in major bank stocks ensures sufficient liquidity for swing trading. Stocks like JPMorgan Chase (JPM) and Bank of America (BAC) see millions of shares exchanged daily, ideal for traders looking to capitalize on price swings.

 Nerdwallet

Banks Are a Powerful Dividend Play

As mentioned earlier, it pays to invest in bank stocks (literally).

Banks like Wells Fargo (WFC) and Citigroup (C) have long track records of paying dividends, providing a steady income stream through bull and bear markets alike. Their stability ensures reliable payouts.

As profits grow, so can dividends. 

For instance, JPMorgan Chase recently increased its dividend by 9.5% on the back of strong earnings. If the recovery continues, expect more banks to boost dividends - a value investor's dream.

Stability + Consistency =  Boring

Bank stocks offer predictable income between dividends and modest share price appreciation. This makes them the healthy kind of boring - a conservative portfolio's best friend.

While not flashy, banks deliver steady returns. JPMorgan Chase and Bank of America returned 49.31% and 43.90%, respectively in 2024 - proving resilience even amid volatility. Their stability balances more aggressive investments.

So while bank stocks may seem boring, their impressive 2024 rebound reveals enduring value. They provide inflation hedging, swing trading potential, and reliable dividends that long-term investors should appreciate. It's time to recognize bank stocks are not your grandpa's investment anymore.

Stocks.News does not have positions in companies mentioned

Justin

Author

Justin Estes is a finance writer and certified financial marketing expert with over 5 years of experience creating educational content for leading brands like the New York Stock Exchange and Franklin Templeton. He honed his craft working at firms such as Greystar and Brookfield Asset Management, where he gained a wealth of knowledge across banking, investments, fintech, and real estate private equ...