High-yielding dividends and affordable share prices propel these 12 banking stocks skyward.
In the wake of Donald Trump's election in 2016, bank stocks have experienced a surge due to policies such as deregulation and rising interest rates. This trend has led investors to seek out high-dividend, low P/E ratio stocks, particularly in the US and Europe.
Since Trump's election, bank stocks have generally benefited, with many stocks rising in the hope of deregulation. One such example is CaixaBank, a Spanish bank, which has gained around 45% in price this year, offering an attractive valuation with a dividend yield of 9.71% and a P/E ratio of 7.6.
However, when it comes to US dividend stocks, they could be particularly attractive now due to certain reasons. US stocks, while generally offering lower dividends compared to European stocks, have better performance. For instance, the Polish bank Bank Polska Kasa Opieki (Bank Pekao) has a dividend yield of 13.32% and a P/E ratio of 5.8.
Investors are keeping a close eye on Bank Pekao, with some waiting for a break above the 200-day moving average before investing. CaixaBank, on the other hand, can be entered in tranches due to its steady performance.
Recent analysis has identified 12 stocks that offer a high dividend and low P/E ratio. While traditional US bank stocks with these characteristics are rare in the current market, the best fits are found in adjacent sectors such as Business Development Companies (BDCs) and mortgage Real Estate Investment Trusts (REITs).
For example, PennantPark Floating Rate Capital (PFLT), a BDC, is highlighted for its high yield (11.8%) and monthly payouts, despite missing earnings expectations in Q2 2025. Ellington Credit Co. (EARN), a mortgage REIT, is another example, with a P/E of 6.0 and a covered dividend last quarter, although it posted a net loss.
Investors should exercise caution when considering high-yield, low-P/E financial stocks, as they often carry higher risk, especially in rising or volatile rate environments. Dividend sustainability and business model risks should be carefully assessed.
For more exclusive analyses, a free BÖRSE ONLINE Outperformance-Newsletter is available. The analysis focuses on financial stocks from the Stoxx Europe 600 index and bank stocks from the S&P 500. "Traffic Light Boom and Trump Rally: These stocks are now being bought by stock market legend Heiko Thieme" is also worth checking out. These stocks were selected based on their performance since the beginning of the year.
Investors are not only focusing on bank stocks in the US and Europe, but are also considering financial stocks from adjacent sectors like Business Development Companies (BDCs) and mortgage Real Estate Investment Trusts (REITs), such as PennantPark Floating Rate Capital (PFLT) and Ellington Credit Co. (EARN). However, potential investors should exercise caution when considering high-yield, low-P/E financial stocks due to the higher risks they often carry, particularly in volatile rate environments.
