Bank stocks reward investors who buy capital strength at a fair price, and right now the price is fair. The largest U.S. lenders just passed the Federal Reserve's annual stress tests, and several are raising dividends and expanding buybacks as a result. JPMorgan Chase plans to lift its quarterly dividend to $1.65 a share, and Wells Fargo plans to take its payout to $0.50 a share.
For value investors, the setup is unusual. Banks earn more when interest rates stay high, because the gap between what they pay on deposits and what they charge on loans (the net interest margin) widens. With the Fed signaling a higher-for-longer stance, that gap is working in the banks' favor. The best bank stocks to buy right now are the ones combining that tailwind with strong balance sheets and reasonable valuations.
Below are seven large-cap bank stocks that screen well on the metrics value investors actually use: return on equity, price to book, and a sustainable dividend.
How We Picked These Bank Stocks
We started with U.S.-listed banks above $50 billion in market value, then screened for three things. First, capital strength: each bank had to clear the most recent Fed stress test, which measures whether it can keep lending through a severe recession. Second, profitability: we favored banks with return on equity (annual profit divided by shareholder equity) above the industry average, because that is the clearest sign a bank earns more than it costs to fund. Third, valuation: we looked for stocks trading at a reasonable price to book (share price divided by net asset value per share), the metric that has historically anchored bank stock returns.
We also weighted toward dividend growth. A bank that raises its payout year after year is signaling that regulators have cleared the capital return and that management trusts its own earnings. Every name below has cleared the latest stress test and pays a dividend.
JPMorgan Chase (JPM)
JPMorgan Chase is the largest and most profitable U.S. bank, and it sets the benchmark every other name on this list is measured against.
Why it's here: JPMorgan earns a higher return on equity than any other money-center bank while carrying one of the strongest capital positions in the industry. It makes money in good times and takes market share in bad ones.
Bull case: The bank passed the stress test with room to spare and plans to raise its quarterly dividend to $1.65 a share. Diversified revenue across consumer banking, trading, and asset management smooths out the cycle that hits single-line lenders hardest.
Risk: JPMorgan trades at a premium to book value, the highest on this list, so the margin of safety is thinner than at the cheaper names. A sharp recession would pressure loan losses.
Key number: 16 straight years of dividend increases.
Bank of America (BAC)
Bank of America is the most rate-sensitive of the giant banks, which makes it a direct way to play a higher-for-longer Fed.
Why it's here: With one of the largest low-cost deposit bases in the country, Bank of America earns more on every basis point that rates hold above zero. That deposit franchise is hard to replicate and cheap to fund.
Bull case: Net interest income climbs as older low-yield bonds roll off and get reinvested at today's higher rates. The stock still trades close to book value, leaving upside if margins expand as expected.
Risk: The same bond portfolio that lifts income as it reprices carries unrealized losses while rates stay elevated. Those losses shrink only as the bonds mature.
Key number: Roughly a third of the U.S. population holds a Bank of America relationship.
Wells Fargo (WFC)
Wells Fargo is the clearest catalyst story in big banking after regulators lifted the asset cap that had frozen its balance sheet for years.
Why it's here: For most of the past decade, Wells Fargo could not grow its balance sheet past a regulatory ceiling. With that cap removed, the bank can chase loans and deposits it was forced to turn away, and it does so with a leaner cost base after years of cleanup.
Bull case: Management can now deploy capital into growth instead of just returning it, and plans to raise the quarterly dividend to $0.50 a share. A bank that spent years on defense is finally allowed to play offense.
Risk: Execution. The market has waited a long time for this, and Wells Fargo has to prove it can grow profitably rather than chase volume at thin margins.
Key number: Third-largest deposit base in the United States.
Citigroup (C)
Citigroup is the deep-value name on this list, trading below the net asset value on its own books.
Why it's here: A multi-year restructuring is shrinking the bank to its strongest businesses, global payments and wealth, while exiting underperforming consumer markets. The payoff is a higher return on equity from a simpler, more focused company.
Bull case: A bank trading below tangible book value does not need a boom to reward shareholders. If management hits its return targets, the gap between price and book value can close on its own, and buybacks below book value add to per-share value.
Risk: Citigroup has promised turnarounds before. The discount exists because the market wants to see the returns before paying full price.
Key number: Trades below tangible book value, a rarity among large U.S. banks.
U.S. Bancorp (USB)
U.S. Bancorp is the highest-quality super-regional bank, long known for the best returns and efficiency in its peer group.
Why it's here: U.S. Bancorp consistently earns one of the highest returns on equity among regional banks while running a leaner cost structure than most. It is a quality compounder that sold off with the regional group and now trades at a discount to its own history.
Bull case: A fee-heavy mix from payments and trust services makes earnings less dependent on rates than a plain lender. As the regional discount fades, a best-in-class operator should re-rate first.
Risk: A large recent acquisition added integration work and stretched capital, which the bank is still rebuilding.
Key number: Decades of consecutive dividend payments through multiple recessions.
PNC Financial Services (PNC)
PNC Financial is a conservatively run super-regional that came through the regional banking stress of recent years stronger than most.
Why it's here: PNC pairs a national franchise with a cautious credit culture and a strong capital position. It is the kind of steady operator that value investors hold through a full cycle.
Bull case: Solid capital gives PNC room to keep raising its dividend and to buy smaller banks at distressed prices, a path it has used to grow before. Higher rates support its lending margins.
Risk: Heavy exposure to commercial real estate lending means an office-market downturn would hit PNC harder than a consumer-focused bank.
Key number: Decades of uninterrupted dividend payments.
Truist Financial (TFC)
Truist Financial is the highest-yielding name here, a Southeast-focused super-regional still capturing the savings from a large merger.
Why it's here: Truist was formed from the merger of two large regional banks, and it is still realizing cost savings from combining the two. That self-help story plays out regardless of where rates go, and the stock carries the highest dividend yield on this list.
Bull case: A strong footprint in fast-growing Southeast markets gives Truist organic loan growth that slower regions lack. Completed cost cuts drop straight to the bottom line.
Risk: Merger integration has been bumpy, and the bank has reset earnings targets along the way. Investors are paying a low multiple because the execution record is mixed.
Key number: Highest dividend yield among the banks on this list.
Bank Stocks at a Glance
What's Driving Bank Stocks Now
Two forces are shaping bank returns. The first is interest rates. Banks make most of their money on net interest margin, and that margin widens when rates stay high. With Fed officials leaning hawkish, the rate backdrop favors lenders. Our breakdown of what happens to stocks when the Fed raises rates walks through why financials tend to hold up better than most sectors in that environment, and the latest hawkish dot plot reinforces the higher-for-longer message.
The second force is capital return. Passing the Fed stress test clears banks to raise dividends and buy back stock, and the largest names are doing both. When a bank repurchases shares below book value, as several of these trade, every buyback raises the net asset value behind each remaining share. That is a quiet but real source of return that value investors prize.
For investors who want bank exposure alongside other discounted names, these picks sit naturally next to our broader best value stocks and best dividend stocks lists, where financials already feature heavily.
What to Watch
- The rate path. Bank margins move with Fed policy. A surprise pivot to rate cuts would compress net interest income and pressure the whole group.
- Credit quality. Loan losses are the main risk in any downturn. Watch commercial real estate exposure at the regional names and consumer charge-offs at the card-heavy banks.
- Capital return updates. Dividend increases and buyback authorizations confirm that regulators see the capital as excess. Each raise is a signal worth tracking.
Bottom Line
The best bank stocks for value investors right now combine three things that rarely line up at once: a rate backdrop that supports earnings, balance sheets strong enough to pass a Fed stress test, and valuations that leave room for the stock to re-rate. JPMorgan and U.S. Bancorp offer quality at a fair price, Citigroup and Bank of America offer the deepest discounts, and Wells Fargo and Truist offer self-help catalysts that play out regardless of the cycle. All seven pay a dividend, and all seven cleared the regulators.
Frequently Asked Questions
Are bank stocks a good investment for value investors? Bank stocks suit value investors because they can be measured on price to book and return on equity, two metrics that anchor long-term returns. Large banks with strong capital and consistent dividends, like the seven above, give investors a way to buy proven earnings power at a reasonable multiple.
Which bank stock pays the highest dividend? Among the large banks on this list, Truist Financial carries the highest dividend yield, followed by the other super-regionals. Yields change with share prices, so check the at-a-glance table above for the current figures pulled live.
Do higher interest rates help or hurt bank stocks? Higher rates generally help banks because they widen the net interest margin, the gap between what a bank earns on loans and pays on deposits. The benefit is largest at banks with big, low-cost deposit bases, such as Bank of America and JPMorgan.
What is price to book and why does it matter for banks? Price to book compares a bank's share price to the net asset value on its balance sheet. Because a bank's assets are mostly financial, book value is a reliable yardstick, and a stock trading below book value (like Citigroup) can reward investors simply by closing that gap.
Are big banks safe after the stress tests? Passing the Fed's annual stress test means a bank holds enough capital to keep lending through a severe recession. Every bank on this list cleared the most recent test, which is why several are raising dividends and buybacks. No stock is risk-free, but the tests are a strong measure of resilience.
