With its diverse array of bank stocks, the financial sector has long been a cornerstone of investment portfolios. While the S&P 500 is the most popular benchmark for overall market performance, a few bank stocks can deliver superior returns through 2030.
Several factors contribute to this optimistic outlook, including higher interest rates, a robust economy and a surge in digital banking solutions. Investors increasingly recognize the potential for substantial gains in this sector, particularly as banks leverage new technologies like artificial intelligence. These elements combined suggest that strategically chosen bank stocks could offer significant outperformance relative to the S&P 500 over the next decade.
Now, let’s discover the three best bank stocks to buy that outperform the S&P 500 through 2030!
JPMorgan Chase (JPM)
JPMorgan Chase (NYSE:JPM), the largest bank in the United States by assets, stands as a pillar of stability in the financial sector. Their diversified business model and strong liquidity make them well-positioned for domination in the banking sector.
JPMorgan’s strong track record of profitability and prudent risk management practices have earned investors’ trust. Jamie Dimon, who has been the CEO of the bank for nearly two decades, is one of the most trusted individuals on Wall Street. The company has particularly navigated tough macroeconomic conditions over the last 18 months.
Higher interest rates have been advantageous for large U.S. banks, which continue to take advantage of this economic landscape. In Q1 FY24, revenue increased 11% YOY to $40.07 billion. Net income increased 6% YOY to $13.42 billion, or $4.44 per share. With management raising their net interest income (NII) forecast to $91 billion for FY24, JPM stock remains one of the top bank stocks to buy in 2024.
Goldman Sachs (GS)
Goldman Sachs (NYSE:GS), renowned for its investment banking prowess, has evolved into a diversified financial institution with a global footprint. The ongoing rebound in deal flow is a positive sign for the stock in 2024.
Goldman Sachs’s expertise in mergers and acquisitions, equity and debt underwriting, and asset management positions it at the forefront of the industry. Their resilience over the last two years and ability to adapt to changing market conditions is a key strength. The company’s asset management divisions have also seen impressive growth over the last several quarters.
In their latest quarterly results, revenue increased 16% YOY to $14.21 billion. EPS increased 32% YOY to $11.58 per share, with assets under supervision hitting a record $2.85 trillion. Their asset and wealth management division continues to grow strongly, reflecting a higher appetite for risks as the broader stock market sees large inflows in 2024. This makes GS stock one of the top bank stocks in May.
iShares U.S. Financials ETF (IYF)
iShares U.S. Financials ETF (NYSEARCA:IYF), while not considered a “stock,” is a relatively safe way to gain exposure to the broader U.S. financial sector. This ETF seeks to track the performance of the Dow Jones U.S. Financial Index, which includes a diverse range of U.S. banks, insurance companies and financial firms.
The iShares U.S. Financials ETF gives investors exposure to the U.S. financial sector. Its diversification helps mitigate company-specific risks, providing peace of mind for the more conservative investors. Its net AUM totaled approximately $2.6 billion and has an expense ratio of 0.40%. IYF’s historical performance has closely mirrored the S&P 500’s Financial Index. Furthermore, it allows investors to participate in the sector’s growth.
The ETF’s top five largest holdings include Berkshire Hathaway, JPMorgan Chase, Bank of America, Wells Fargo and Goldman Sachs. Additionally, the ETF has averaged an 11% total return over the last decade. Investors looking for diversified exposure to bank stocks should strongly consider this ETF in 2024.
On the date of publication, Terel Miles 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.
