3 Bank Stocks Worth Buying Now With Attractive 4%+ Dividend Yields

First Interstate BancSystem, Southside Bancshares and First Hawaiian are highlighted as income opportunities with dividend yields of 5.2%, 4.9% and 4.2%, respectively, and each carries a Zacks Rank #2 (Buy). FIBK is optimizing its branch footprint and balance sheet, while SBSI targets mid-single-digit 2026 loan growth despite funding-cost pressure. FHB expects 3%-4% loan growth and 2026 NIM of 3.24%-3.25%, versus 3.15% in 2025, alongside its pending all-stock acquisition of TriCo Bancshares that would create a roughly $34 billion-asset bank.

Analysis

The income framing obscures materially different rate and credit betas. FHB has the cleaner near-term earnings setup: asset sensitivity, lower refinancing pressure and a pending scale transaction can support a rerating if deposit costs remain contained. Its key risk is that an all-stock acquisition imports California commercial-real-estate and integration exposure precisely when investors are rewarding simpler balance sheets; the stock’s upside is therefore likely gated by regulatory timing and pro forma capital disclosure over the next 3-9 months.

FIBK’s restructuring can improve efficiency, but branch exits also surrender low-cost deposits and local lending relationships before expense savings are fully realized. The combination of a relatively elevated payout ratio and meaningful short-term debt means the yield is not a substitute for a funding analysis; a renewed regional-bank liquidity scare would likely punish FIBK disproportionately despite its cash balance. The relevant 6-18 month catalyst is tangible improvement in deposit beta and the efficiency ratio, not loan repricing alone.

SBSI is the highest cyclical expression of the group. Texas growth and construction-loan funding can drive earnings upside in a stable-to-higher rate environment, but wholesale borrowings make margin and liquidity outcomes more sensitive to funding-market conditions than the dividend screen suggests. Consensus may be underpricing this asymmetry: loan growth is bullish only if deposit growth keeps pace; otherwise incremental assets could dilute returns and force a lower valuation multiple.

The contrarian view is that regional-bank dividend yields are compensation for duration, funding and commercial-real-estate uncertainty rather than a broad value signal. Prefer the balance-sheet-quality and scale catalyst in FHB over reaching for the highest headline yield. This view is falsified if FHB’s pro forma capital accretion is weak, regulatory approval extends beyond expectations, or its NIM guidance falls below the stated range; for SBSI, sustained deposit outflows or higher wholesale funding would invalidate the income thesis quickly.

Key Decisions for Investors

• Initiate a 3-6 month long FHB / short KRE pair at market-neutral beta. Thesis: FHB has identifiable NIM and strategic catalysts while KRE retains diversified funding and CRE risk; target 10-15% relative outperformance. Exit if FHB cuts NIM outlook, merger-related capital metrics disappoint, or the regulatory review materially delays closing.
• Avoid adding to SBSI solely for yield; place it on a watchlist until the next earnings release confirms deposit growth and stable-to-lower funding costs alongside construction-loan deployment. If those metrics hold, a small long position offers upside from operating leverage; if short-term borrowings rise materially, the appropriate trade is short SBSI versus long FHB.
• Treat FIBK as an execution-driven income holding rather than a tactical long. Consider entry only after quarterly evidence that branch rationalization is reducing expenses without accelerating deposit attrition; require stable dividend coverage and lower reliance on short-term debt. A dividend freeze, weaker core deposit trend, or no efficiency-ratio progress over two reporting periods is a sell trigger.
• Monitor TCBK merger-arbitrage spread rather than assume a standalone catalyst. Establish a long-TCBK/short-FHB ratio hedge only after confirming exchange ratio, collar terms, expected close date and regulatory conditions; absent those data, the spread cannot be priced with discipline.