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3 S&P 500 Bank Stocks With More Than 4% Dividend Yield to Watch

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Key Takeaways

  • KeyCorp posts 4.4% yield, with revenue growth, Fed rate cuts, and acquisitions supporting expansion.
  • Bank of Hawaii offers a 4.2% yield, backed by rising NII, fee income, and steady balance sheet strength.
  • Comerica delivers a 4.1% yield, with loan growth, efficiency efforts, and strong liquidity driving earnings.

With the Federal Reserve reducing interest rates and economic growth showing resilience, the outlook for the banking sector is turning more favorable. Lower borrowing costs will likely stimulate loan demand and consumer spending, while steady economic expansion will support credit quality and profitability. 

In this favorable scenario, several S&P 500 banks, including KeyCorp (KEY - Free Report) , Bank of Hawaii (BOH - Free Report) , and Comerica (CMA - Free Report) , offer solid dividend yields that stand out as appealing opportunities. Hence, given attractive income potential with solid fundamentals, these banks should remain on investors’ radar.

To choose these banks, we ran the Zacks Stocks Screener to identify stocks with a dividend yield in excess of 4%. Also, these stocks have a Zacks Rank of 2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Further, all three bank stocks rose more than 10% in the past year, underscoring the market’s growing confidence in their earnings power and balance-sheet resilience.

Price Performance

Zacks Investment ResearchImage Source: Zacks Investment Research

 

3 Bank Stocks With Solid Dividend Yield to Keep an Eye on

KeyCorp, headquartered in Cleveland, OH, is one of the leading regional banks in the country. The company provides a wide range of products and services, such as commercial and retail banking, commercial leasing, investment management, consumer finance and investment banking products.

KeyCorp is well-placed to benefit from solid loans and deposit balances, relatively lower interest rates, and a robust balance sheet. The company has been witnessing top-line growth over the past several years. Supported by decent loan demand, Fed rate cuts, and the company’s efforts to strengthen fee income, its top line is expected to keep improving.

KeyCorp’s business expansion efforts are impressive. Given the buyouts/expansion initiatives, it has strengthened its product suites and market share. Though it is less likely to pursue any depository buyouts in the near term, the bank remains focused on acquiring entrepreneurial niche businesses, which will support fee income growth.

As of June 30, 2025, KEY had a total debt of $19.1 billion. Its cash and due from banks and short-term investments were $13.3 billion as of the same date. Given a decent liquidity position and earnings strength, capital distribution plans seem sustainable.

The company has a dividend yield of 4.4%. In the last five years, KeyCorp increased its dividends twice, with a payout ratio of 60%. It carries a Zacks Rank 3, at present.

KeyCorp Dividend Yield (TTM)

Headquartered in Honolulu, Hawaii, Bank of Hawaii is a bank holding company that provides a broad array of products and services in Hawaii, Guam, and other Pacific Islands.

Bank of Hawaii’s revenue growth is fueled by rising NII and fee income. Going forward, NII is expected to continue to increase as a result of the balance sheet actions and ongoing asset cash-flow repricing, along with the Fed rate cuts. Further, non-interest income is expected to increase in the upcoming period as revenues from trust services, merchant services, and other transaction volumes continue to improve steadily. 

The company has a solid liquidity profile. As of June 30, 2025, its liquidity amounted to $768.7 million. Total debt aggregated to $608.2 million as of the same date. 

BOH rewards shareholders handsomely. The company has a dividend yield of 4.2%. In the last five years, it increased its dividends once, with a payout ratio of 73%. It carries a Zacks Rank #2.

Bank of Hawaii Corporation Dividend Yield (TTM)

Dallas, TX-based Comerica is a banking and financial services company. The company delivers financial services in three primary geographic markets — Texas, California, and Michigan — as well as Arizona and Florida.

We remain optimistic about Comerica’s income-generation capability, given its solid organic growth. A robust loan pipeline, Fed rate cuts, and strength in fee income will keep supporting its top-line growth.

Comerica’s focus on improving operational efficiency and reinvesting in strategic growth will drive future earnings power. The company’s efforts in product enhancements, improvement in sales tools and training, as well as improved customer analytics, bode well for robust growth.

The company has a solid liquidity profile. As of June 30, 2025, the company’s total debt aggregated $8.7 billion. Its total liquidity capacity was $40.5 billion as of the same date. It also has a $17.4-billion capacity remaining in its discount window. Hence, its capital distribution activities seem sustainable.

The stock has a dividend yield of 4.1%. The company raised its quarterly dividend once in the last five years, with a payout ratio of 54%. It carries a Zacks Rank #3.

Comerica Incorporated Dividend Yield (TTM)

 

Final Thoughts on 3 Bank Stocks With Solid Dividends

Dividend-paying bank stocks like KeyCorp, Bank of Hawaii, and Comerica offer investors a combination of attractive income and potential growth, particularly in a favorable economic environment with declining interest rates. With yields above 4%, solid balance sheets, and strategic initiatives to strengthen revenue streams, these banks are well-positioned to reward shareholders. However, investors should remain selective, as not all dividend stocks can sustain payouts over the long term. Monitoring fundamentals, payout ratios, and market conditions is essential for building a resilient, income-generating portfolio.


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Comerica Incorporated (CMA) - free report >>

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