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Financial Stocks Poised for Growth in 2025: A Look at Dividend-Paying Opportunities

As the financial sector braces for potential changes under a second Trump administration, financial stocks, both large and small, are expected to benefit from reduced regulation, increased lending, and higher merger and acquisition activity.

Since Donald Trump's victory in the 2024 election, bank stocks have surged, reflecting investor optimism about less regulatory oversight and the potential for a more favorable environment for financial institutions. For example, the SPDR S&P Bank ETF (KBE), which tracks a wide range of financial companies, has gained 11.3% since November 4, while the SPDR S&P Regional Banking ETF (KRE), focused on smaller banks, has surged 13%.

With this in mind, we identified several financial stocks that offer solid dividend yields, consistent income, and potential as hedges against market volatility. Data. was gathered from a variety of sources to paint a complete picture and help you identify attractive stocks.

We use this criteria:

  • Inclusion in the Financial Select Sector SPDR Fund (XLF)

  • A dividend yield of at least 1.3% (greater than the S&P 500 yield)

  • Dividend growth of 10% or more

  • A gain of at least 1% for the month

Top Financial Stocks Offering Solid Dividends

1. Morgan Stanley (MS)
Morgan Stanley has performed strongly in 2024, up about 44% year-to-date. The bank currently offers a 2.8% dividend yield, with a robust dividend growth rate of 10.2% over the past year. In October, the bank reported strong third-quarter results, driven by solid performance in capital markets and investment management.

While analysts are generally neutral on the stock, the majority expect it to continue outperforming in the coming months, despite a slight implied downside of around 10%.

2. Regions Financial (RF)
Up 36% in 2024, Regions Financial offers a 3.8% dividend yield, with a notable 18.9% dividend growth rate over the past year. Investment banks, including Deutsche Bank, recently upgraded their ratings for Regions, citing a low valuation and the absence of significant regulatory risks.

Analysts are optimistic about the bank’s potential, with many seeing it as undervalued compared to its peers, although price targets suggest a slight decline of nearly 1%.

3. Bank of New York Mellon (BK)
Bank of New York Mellon has enjoyed a 50% increase in its stock price this year. The stock provides a 2.4% dividend yield and has demonstrated impressive dividend growth of 11.3%. Following a series of investor meetings, Deutsche Bank upgraded the stock to a "buy," highlighting BNY Mellon’s disciplined expense control, strong organic revenue growth potential, and a solid capital return policy.

Analysts have a bullish outlook on the stock, with an average price target suggesting further gains of around 4%.

4. Goldman Sachs (GS)
Goldman Sachs remains a key player in the financial sector, offering investors both growth potential and dividends. Known for its strong market presence, Goldman Sachs continues to see favorable conditions in the sector, benefiting from favorable economic and market conditions. It has a dividend yield of 2.05% and a great future. In 2022 and 2023, its investment banking revenues fell by 47.9% and 15.5% year-over-year, respectively. However, the first nine months of 2024 saw a robust recovery, with revenues rising nearly 24% compared to the same period in 2023. This rebound was fueled by a resurgence in global mergers and acquisitions (M&As), driving significant growth in deal value and volume across the industry.

TipRanks classifies Goldman Sachs stock a Strong Buy based on 12 Buy ratings and four Hold ratings assigned by Wall Street analysts.

5. Discover Financial Services (DFS)
As a leading credit card provider, Discover offers a competitive dividend yield of 1.59% while continuing to demonstrate strong earnings potential. Its stock is an attractive option for those seeking both dividend income and exposure to the credit sector. It recently hit new all time highs and has been in the news for its anticipated merger with Capital One. The merger seeks to enhance Capital One's digital banking capabilities by utilizing Discover's established online banking presence, while Discover is expected to maintain its brand identity. This partnership could lead to improvements in the range and quality of banking services offered.

Discover Financial Services stock has received a consensus rating of hold. The average rating score is and is based on 27 buy ratings, 43 hold ratings, and 2 sell ratings.

Note: This was written on 10th December, numbers may have changed since.

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