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5 High-Quality Financial Stocks with Strong Dividend Yields

High-quality stocks with strong dividend yields are a smart way to navigate recent market volatility.

Financial stocks, despite fluctuating with the broader market due to trade tensions and economic concerns, are among the standouts.

Stocks climbed last week but remain lower since President Donald Trump’s April 2 tariff announcement. While reciprocal tariffs are paused as Trump negotiates, his 10% unilateral tariff persists.

The financial sector also gained, with the Financial Select Sector SPDR Fund (XLF) up roughly 3% last week. However, XLF is flat year-to-date, while the S&P 500 is down nearly 7%. Bank of America remains overweight on financials.

Despite recent turbulence, Wall Street anticipates financials will thrive under Trump’s presidency, thanks to deregulation. Still, there may be ongoing volatility from policy uncertainty and inflation risks tied to tariffs.

Below, we have highlighted financial stocks in the Russell 3000 with dividends that were originally picked by Bank of America. However, our team performed additional research to paint a true picture.

These stocks have above-median return on equity, dividend yields exceeding the index, and a payout ratio (last 12-month EPS to next 12-month dividend) above 1.0.

Here are five buy-rated financial stocks that meet these criteria:

1. Morgan Stanley (MS)

• Dividend Yield: 3.29% (as of Thursday’s close)

• Year-to-Date Performance: Down 8%

  Morgan Stanley reported a first-quarter earnings and revenue beat, driven by a 45% surge in stock trading revenue. This reflects the firm’s ability to capitalize on volatile market conditions, particularly in equity trading.

  The firm’s investment banking and wealth management divisions remain resilient, benefiting from increased market activity and client engagement in volatile environments.

  On the negative side, CEO Ted Pick highlighted an uncertain outlook, with stock, bond, and currency markets showing significant volatility due to shifting policy expectations. This unpredictability has led some clients to defer strategic activities, potentially impacting fee-based revenue.

2. JPMorgan Chase & Co. (JPM)

• Dividend Yield: 2.32%

• Year-to-Date Performance: Up 2%

  JPMorgan posted $46.01 billion in first-quarter revenue, exceeding the $44.11 billion consensus estimate. A surge in trading revenue underscores the bank’s strength in capital markets.

  The bank repurchased $7 billion in common stock and announced a 12% dividend increase, signaling confidence in its financial health and commitment to shareholders.

  CEO Jamie Dimon emphasized JPMorgan’s readiness for various scenarios, including tariffs, sticky inflation, and high fiscal deficits. The bank’s strong capital position positions it as a “pillar of strength” in volatile times.

  Unlike many peers, JPMorgan’s shares are up 2% year-to-date, reflecting investor confidence in its diversified business model and regulatory resilience.

  On the downside, at 2.32%, JPMorgan’s yield is below some peers, potentially making it less attractive to income-focused investors.

  Also, Dimon acknowledged risks from tariffs and inflation, which could pressure margins or loan growth if economic conditions deteriorate. Hence, there may be some downside.

3. BlackRock, Inc. (BLK)

• Dividend Yield: 2.33%

• Year-to-Date Performance: Down nearly 11%

  BlackRock’s first-quarter adjusted EPS of $11.30 surpassed the $10.14 consensus estimate, highlighting operational efficiency and profitability despite a revenue miss.

  CEO Larry Fink emphasized the firm’s strong positioning and deep client relationships, which have historically driven growth during turbulent periods like the financial crisis or 2022 inflation surge.

  Fink’s optimism about navigating structural policy shifts suggests BlackRock could capitalize on market dislocations, particularly in ETFs and alternative investments.

  However, not everything is good. First-quarter revenue of $5.28 billion fell short of the $5.34 billion estimate, reflecting challenges in fee generation amid client uncertainty. Furthermore, Fink noted that client conversations are dominated by uncertainty about policy and economic shifts, which could delay inflows or asset allocation decisions.

  Lastly, the nearly 11% year-to-date decline indicates investor concerns about near-term growth prospects in a volatile market environment.

4. Fifth Third Bancorp (FITB)

• Dividend Yield: 4.22%

• Year-to-Date Performance: Down 15%

  At 4.22%, Fifth Third offers one of the highest yields among the group, appealing to income-focused investors seeking inflation-protected returns.

  As a regional bank, Fifth Third benefits from localized lending and deposit relationships, which can provide stability in uncertain markets.

  Anticipated deregulation under the Trump administration could reduce compliance costs and enhance profitability for regional banks like Fifth Third.

  However, we cannot neglect the 15% year-to-date drop that reflects broader concerns about regional banks’ exposure to economic slowdowns or rising interest rates, which could pressure loan demand.

  Also, compared to larger peers like JPMorgan, Fifth Third’s smaller size and regional focus may limit its ability to compete in capital markets or absorb macroeconomic shocks.

5. East West Bancorp, Inc. (EWBC)

• Dividend Yield: 2.84%

• Year-to-Date Performance: Down 10%

  The 2.84% yield offers a compelling income stream, surpassing the index median and appealing to dividend-focused investors.

  The bank’s focus on U.S.-Asia cross-border banking provides a unique growth avenue, particularly in trade finance and wealth management for Asian-American clients.

  Like other financials, East West could see reduced regulatory burdens under a Trump presidency, potentially boosting margins and lending capacity. Again, we cannot neglect the 10% year-to-date drop that reflects investor concerns about regional banks and potential trade disruptions, given East West’s exposure to U.S.-Asia markets.

  Ongoing trade uncertainties and tariffs could disrupt cross-border business, a key differentiator for East West, potentially impacting loan growth or fee income.

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Nothing in this newsletter is financial advice. Always do your own research and think for yourself.