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KeyCorp (KEY) Should be on Your Radar for 5.4% Dividend Yield
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For banks, this year is turning out to be better than 2023. Clarity on the Federal Reserve’s rate path and higher chances of a soft landing of the U.S. economy have turned investors bullish on the banking sector.
So, keeping an eye on fundamentally solid lenders that also have impressive dividend yields will be wise now. One such stock is KeyCorp (KEY - Free Report) .
KeyCorp provides wide range of financial products and services, operating in a widespread network of more than 950 branches. The bank has been increasing its quarterly dividend on a regular basis, with the last hike of 5.1% to 20.5 cents per share in November 2022.
In the past five years, KeyCorp raised its dividend thrice, with an annualized dividend growth rate of 3.4%. Considering the last day’s closing price of $15.08, the company’s dividend yield currently stands at 5.44%. This is impressive compared with the industry’s average of 3.74% and attractive for investors as it represents a steady income stream.
Should one keep an eye on KeyCorp stock to earn a high dividend yield? Let’s check the company's financials to understand the risks and rewards before making any decision.
KeyCorp has been witnessing solid top-line growth over the past several years. Though tax-equivalent revenues declined in 2019, 2022 and 2023, the metric witnessed a compound annual growth rate (CAGR) of almost 1% over the last five years (2017-2023). The rise was mainly driven by higher loans and deposit balances. During the four-year period ended 2023, loans and deposits witnessed a CAGR of 4.3% and 6.8%, respectively.
Supported by decent loan demand and efforts to strengthen fee income, its top line is expected to keep improving. Though we project total revenues (TE) to decline marginally in 2024, the metric will rebound and grow 9.8% and 5.5% in 2025 and 2026, respectively.
With the Federal Reserve expected to keep interest rates high in the near term, KeyCorp’s net interest margin (NIM) is likely to continue growing in the near term though the pace of growth will slow down on higher funding costs. Though the metric witnessed a decline in 2023 to 2.17% from 2.64% in 2022 and 2.50% in 2021 on rising deposit costs, it is expected to improve going forward, driven by higher rates and stabilizing deposit costs. We anticipate NIM to be 2.41%, 3.00% and 3.45% in 2024, 2025 and 2026, respectively.
KeyCorp’s business restructuring initiatives are impressive. In 2022, the company acquired GradFin, which strengthened its digital offering capabilities. In 2021, it acquired a B2B-focused digital platform, XUP Payments, and a data analytics-driven consultancy firm, AQN Strategies LLC. These, along with several past buyouts/expansion initiatives, are expected to strengthen its product suites and market share as well as help diversify revenues. This will also help drive fee income growth. We project total non-interest income to rise 5.1%, 5.3% and 3.6% in 2024, 2025 and 2026, respectively.
Despite several near-term headwinds, including rising expenses, substantial exposure to commercial loans and poor asset quality due to a tough macroeconomic backdrop, KEY is fundamentally robust.
After an unimpressive performance last year, when KeyCorp’s shares lost almost 17%, 2024 is turning out as a better one. So far this year, shares of this Zacks Rank #3 (Hold) company have gained 4.8% compared with the industry’s rally of 12.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Therefore, investors should keep this stock on their radar as this will help generate robust returns over time.
Bank Stocks With Solid Dividends
Major regional banking stocks like Truist Financial (TFC - Free Report) and Comerica (CMA - Free Report) are worth a look, as these, too have decent dividend yields. Both currently carry a Zacks Rank of 3.
Considering the last day’s closing price, Truist Financial’s dividend yield currently stands at 5.48%. In the past six months, shares of TFC have soared 38.9%.
Based on the last day’s closing price, Comerica’s dividend yield currently stands at 5.28%. In the past six months, shares of CMA have jumped 31.6%.
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KeyCorp (KEY) Should be on Your Radar for 5.4% Dividend Yield
For banks, this year is turning out to be better than 2023. Clarity on the Federal Reserve’s rate path and higher chances of a soft landing of the U.S. economy have turned investors bullish on the banking sector.
So, keeping an eye on fundamentally solid lenders that also have impressive dividend yields will be wise now. One such stock is KeyCorp (KEY - Free Report) .
KeyCorp provides wide range of financial products and services, operating in a widespread network of more than 950 branches. The bank has been increasing its quarterly dividend on a regular basis, with the last hike of 5.1% to 20.5 cents per share in November 2022.
In the past five years, KeyCorp raised its dividend thrice, with an annualized dividend growth rate of 3.4%. Considering the last day’s closing price of $15.08, the company’s dividend yield currently stands at 5.44%. This is impressive compared with the industry’s average of 3.74% and attractive for investors as it represents a steady income stream.
KeyCorp Dividend Yield (TTM)
KeyCorp dividend-yield-ttm | KeyCorp Quote
Should one keep an eye on KeyCorp stock to earn a high dividend yield? Let’s check the company's financials to understand the risks and rewards before making any decision.
KeyCorp has been witnessing solid top-line growth over the past several years. Though tax-equivalent revenues declined in 2019, 2022 and 2023, the metric witnessed a compound annual growth rate (CAGR) of almost 1% over the last five years (2017-2023). The rise was mainly driven by higher loans and deposit balances. During the four-year period ended 2023, loans and deposits witnessed a CAGR of 4.3% and 6.8%, respectively.
Supported by decent loan demand and efforts to strengthen fee income, its top line is expected to keep improving. Though we project total revenues (TE) to decline marginally in 2024, the metric will rebound and grow 9.8% and 5.5% in 2025 and 2026, respectively.
With the Federal Reserve expected to keep interest rates high in the near term, KeyCorp’s net interest margin (NIM) is likely to continue growing in the near term though the pace of growth will slow down on higher funding costs. Though the metric witnessed a decline in 2023 to 2.17% from 2.64% in 2022 and 2.50% in 2021 on rising deposit costs, it is expected to improve going forward, driven by higher rates and stabilizing deposit costs. We anticipate NIM to be 2.41%, 3.00% and 3.45% in 2024, 2025 and 2026, respectively.
KeyCorp’s business restructuring initiatives are impressive. In 2022, the company acquired GradFin, which strengthened its digital offering capabilities. In 2021, it acquired a B2B-focused digital platform, XUP Payments, and a data analytics-driven consultancy firm, AQN Strategies LLC. These, along with several past buyouts/expansion initiatives, are expected to strengthen its product suites and market share as well as help diversify revenues. This will also help drive fee income growth. We project total non-interest income to rise 5.1%, 5.3% and 3.6% in 2024, 2025 and 2026, respectively.
Despite several near-term headwinds, including rising expenses, substantial exposure to commercial loans and poor asset quality due to a tough macroeconomic backdrop, KEY is fundamentally robust.
After an unimpressive performance last year, when KeyCorp’s shares lost almost 17%, 2024 is turning out as a better one. So far this year, shares of this Zacks Rank #3 (Hold) company have gained 4.8% compared with the industry’s rally of 12.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Therefore, investors should keep this stock on their radar as this will help generate robust returns over time.
Bank Stocks With Solid Dividends
Major regional banking stocks like Truist Financial (TFC - Free Report) and Comerica (CMA - Free Report) are worth a look, as these, too have decent dividend yields. Both currently carry a Zacks Rank of 3.
Considering the last day’s closing price, Truist Financial’s dividend yield currently stands at 5.48%. In the past six months, shares of TFC have soared 38.9%.
Based on the last day’s closing price, Comerica’s dividend yield currently stands at 5.28%. In the past six months, shares of CMA have jumped 31.6%.