The COVID-19 crisis was an unprecedented time, especially during the beginning when there was a ton of uncertainty and panic related to the virus, its spread and just what would happen to the world. For many segments of the economy, this uncertainty was met with a variety of moves to shore up capital and get through the virus as best as a company could.
For the major bank stocks, this meant creating loan-loss reserves. But, luckily for the banks, much of the carnage that was predicted never came true.
That means the banks are sitting on a ton of excess cash on their balance sheets. Adding in the growing global economy, better conditions for employment, consumer growth, etc., and you have a recipe for higher dividends and a return to buyback programs. And it looks like the Federal Reserve may provide a boost as well.
All in all, the major bank stocks could be a good bet for the rest of the year as they start to hand out plenty of cash back to shareholders.
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