- Yields have risen since last summer
- Valuations are cheap
Banks have turned on the dividend taps as the higher rate environment widened their net interest margins. The latest UK dividend monitor report from Computershare revealed that banks paid out the most dividends of any sector in 2023, ahead of oil and mining, the first time that they have led the way since the halcyon days before the global financial crisis (GFC) struck in 2007.
With full year results due from the major players this month, it's a good moment to take a closer look at banks on our Alpha income screen and consider what role the sector can play in an income portfolio. Higher rates have boosted the returns available on cash balances and money market funds, which raises the question of whether yields on offer at the banks are worth the risk.
