U.S. bank stocks have been on investors radar after posting strong first quarter 2023 financial results.
With the collapse of Silicon Valley Bank, depositors began to lose trust in the banking system causing a run on regional banks.
First Republic Bank is down 93.34% year to date, as the company revealed that they saw more than $100 billion in deposit outflows amid the regional banking collapse.
Ultimately, this is good news for U.S. bank stocks like JP Morgan Chase and Bank of America.
Large U.S. banks are benefiting tremendously from higher interest rates, fuelling the company’s net interest income on deposits.
This only makes sense, as consumers are paying more on loan products such as mortgages, personal loans, and auto loans.
As consumers have lost trust in the regional banking sector, deposit outflows are likely to funnel into larger U.S. banks.
Below, we will present the 2 Best U.S. Bank Stocks to buy in 2023!
Best U.S. Bank Stocks to Buy Now
1. JP Morgan Chase & Co. (NYSE: JPM)
- Ticker: JPM
- Dividend Yield: 2.84%
- 10-Yr Dividend Growth Rate: 14.40%
- Payout Frequency: Quarterly
- Payout Ratio: 29.50%
- Market Cap: $402.85 Billion
JP Morgan Chase is an American multinational financial services company and America’s largest bank by market capitalization.
They are also the third largest bank in the world by total assets under management.
The company serves 66 million clients in the United States and has more than $2.6 Trillion in assets under management (AUM).
JP Morgan employs more than 290,000 people and has approximately $3.67 trillion in total assets.
In 2022, the company had annual revenues of $154.79 Billion.
With a yield of 2.84%, JP Morgan is the best U.S. bank stock to buy in 2023.
First Quarter 2023 Earnings Highlights:
- Total net revenue of $39.3 billion, up 25% year over year.
- Net income of $12.62 billion, up 52.4% year over year.
- Diluted earnings per share (EPS) of $4.10, up 55.89% year over year.
- Net interest income of $20.8 billion, up 49% year over year.
2. Bank of America (NYSE: BAC)
- Ticker: BAC
- Dividend Yield: 2.96%
- 10-Yr Dividend Growth Rate: 36.06%
- Payout Frequency: Quarterly
- Payout Ratio: 26.13%
- Market Cap: $229.92 Billion
Bank of America is an American multinational investment bank financial services company.
The company serves more than 68 million clients and has approximately $1.46 Trillion in assets under management (AUM).
Bank of America employs more than 215,000 people and has approximately $3.05 trillion in total assets.
Berkshire Hathaway is Bank of America’s largest shareholder, making it a staple for Warren Buffett Stocks. Berkshire owns approximately 12.62% of the company’s outstanding shares.
In 2022, the company had annual revenues of $115.05 Billion.
With a dividend growth rate of over 30%, Bank of America’s low payout ratio and growing net interest income make it well positioned for the long term.
First Quarter 2023 Earnings Highlights:
- Total revenue of $25.33 billion, up 9.18% year over year.
- Net income of $8.2 billion, up 15% year over year.
- Diluted earnings per share (EPS) of $0.94, up 17.50% year over year.
- Net interest income of $14.4 billion, up 25% year over year.
Should You Buy U.S. Bank Stocks Now?
The stock market is currently in a period of extreme volatility, as investors digest higher rates and a slowing economy.
U.S. bank CEO’s have reiterated that the consumer is in good shape, despite high inflation and a declining savings rate.
The truth is that consumers are just getting by taking out loans with high interest to cover daily living expenses like food, shelter and transportation.
Investors are betting that the Fed is not finished hiking interest rates, expected to raise interest rates another 25 bps at the next Fed Meeting on May 3rd.
This is good news for U.S. banks, as they have largely benefitted on the back of higher interest rates.
Furthermore, the collapse of the regional banking system is still in its infancy stages, likely leading to deposit inflows into large U.S. banks like JP Morgan and Bank of America.
While the economy is in a rut, now could be a great time to invest in u.s. bank stocks on net interest income expansion.
Disclosure: The author holds no position mentioned in this article. Freedom Stocks has a disclosure policy.
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