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

Amid a favorable banking outlook driven by anticipated Federal Reserve interest rate reductions and resilient economic growth, three S&P 500 bank stocks are highlighted for their attractive dividend yields exceeding 4%. KeyCorp (KEY) offers a 4.4% yield, Bank of Hawaii (BOH) 4.2%, and Comerica (CMA) 4.1%, with each supported by strong fundamentals including revenue growth, strategic initiatives, and robust liquidity. These institutions present compelling opportunities for income and potential growth, though investors are advised to maintain selectivity and monitor underlying fundamentals.

Analysis

The outlook for the banking sector is viewed as increasingly favorable, predicated on anticipated Federal Reserve rate reductions and sustained economic resilience, which are expected to bolster loan demand and credit quality. Within this context, three S&P 500 regional banks—KeyCorp (KEY), Bank of Hawaii (BOH), and Comerica (CMA)—are highlighted for their compelling dividend yields and fundamental strengths. All three have demonstrated market confidence with stock price gains exceeding 10% over the past year. KeyCorp offers the highest yield at 4.4%, supported by a strategy to grow fee income through niche acquisitions and a 60% payout ratio. Bank of Hawaii, with a 4.2% yield and a Zacks Rank #2 (Buy), is positioned for revenue growth from rising Net Interest Income (NII) and fee income, though it has a higher payout ratio of 73%. Comerica provides a 4.1% yield and is noted for its substantial liquidity capacity of $40.5 billion and the lowest payout ratio of the group at 54%, suggesting strong dividend sustainability. The provided balance sheet data for all three banks is dated as of June 30, 2025, indicating a forward-looking perspective on their financial positions.

Key Decisions for Investors

• Given the positive macroeconomic outlook for banks and attractive yields above 4%, income-focused investors should consider adding exposure to KeyCorp, Bank of Hawaii, and Comerica.
• Among the three, Bank of Hawaii (BOH) warrants closer attention due to its 'Buy' rating and expected NII growth, although its relatively high 73% dividend payout ratio requires careful monitoring for sustainability.
• Investors should evaluate Comerica's (CMA) strong liquidity position and low 54% payout ratio as key indicators of dividend safety, potentially making it the most conservative choice of the trio for income security.
• While KeyCorp's (KEY) 4.4% yield is the most attractive, its success is partly contingent on its strategy of acquiring niche businesses, so investors should track its M&A execution and progress in growing non-interest income.