The 3 Best Bank Stocks to Buy for August 2023

Stocks to buy

Bank stocks have been thrust into the investor spotlight due to the recent Federal Reserve stress tests and the drama about regional banks. However, despite these challenging waves, a few bank stocks have kept their heads above water, drawing investors to hunt for the best bank stocks to buy.

Fueled by favorable stress test outcomes and the fading troubles of regional bank troubles, these leading bank stocks have caught the eye of savvy investors. If the economic engine continues its powerful performance and the job market remains robust, wagering on bank stocks could be an incredibly smart move.

Having said that, let’s look at three bank stocks with potential that could offer beneficial exposure to the sector’s finest. These financial sector stalwarts weather the storm and promise a profitable voyage for those who can stomach the risk.

JPMorgan (JPM

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JPMorgan (NYSE:JPM) is standing tall as the largest U.S. bank in terms of assets under management. It continues to flaunt its financial might, reporting a massive surge in sales to $41.3 billion in the second quarter. This uptick also saw a record profit during the same period, adding another feather to the cap of the century-old conglomerate.

Though the company’s deposits witnessed a year-over-year dip, these are more likely a reflection of regional banks’ incentives than a cause for concern. Unlike regional competitors, JPMorgan seeks to minimize losses instead of attracting more depositors with higher interest rates.

It boasts an enviable dividend profile yielding over 2.5% with eight consecutive years of payout expansion. Further sweetening the pot, the firm recently announced a 5% year-over-year boost to its quarterly dividend, raising it to $1.05 per share for the third quarter, underlining its sustained financial robustness.

Goldman Sachs (GS)

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Goldman Sachs (NYSE:GS) is a titan in Wall Street’s global finance landscape. With an illustrious 150-year history, it’s generated consistent shareholder returns averaging over 20%. Despite facing scandals and criticisms, the bank has effectively maintained its reputation as the best investment bank in the world. Renowned for its expertise in raising capital, mergers, and more, the bank is poised for resurgence as macro uncertainty wanes and the global banking segment recovers.

Though 2022 saw a 24% drop in sales due to the IPO market collapse, the horizon looks promising. The Federal Reserve’s rate hike cycle is nearing the end, pointing to an IPO market revival with successful listings already materializing. Additionally, plans to wind down and potentially sell loss-making segments foreshadow an earnings uptick. Such strategic moves reiterate Goldman Sachs’ resilience and capacity to adapt, fortifying its position as a leading financial powerhouse.

New York Community Bank (NYCB)

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Despite a troublesome year for regional banks with three already failed, New York Community Bank (NYSE:NYCB) emerges as an exception. This regional bank has not only survived but thrived, positioning itself as one of the hottest banking stocks at this time — with an incredible dividend to boot. By acquiring most of the deposits and $13 billion in loans from the failed Signature Bank, NYCB has scored a massive victory and boosted its assets by more than 35% to over $120 billion.

Its second-quarter results further demonstrate its rock-solid financial performance. Its adjusted earnings per share of 47 cents crushed the 31 cents average analyst estimate, and net interest income of $900 million blew past the $771 billion consensus. The bank is showing no signs of slowing down. Additionally, total revenue rose 219% year-over-year, painting a bright future for NYCB.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.