Dividend stocks have been a welcome port in this current stock market storm. The dividend income they provide can either boost total returns if reinvested or put money in your pocket if you take the distributions. Some of the best dividends right now are coming out of the banking industry -- where rising interest rates will boost interest income and should increase revenue, as long as loan activity doesn't crater in a recessionary environment.

But the benefit of dividend stocks is that those dividends are paid to investors no matter what the stock price does. Here are two of the highest-yielding dividend stocks in the banking industry -- KeyCorp (KEY -2.71%) and Citigroup (C -1.67%). Let's take a look at how much income you'd have if you invested $400 in these two stocks.

KeyCorp and Citigroup both have huge yields

Citigroup is well known to most people as one of the four largest banks in the U.S. KeyCorp is less familiar, as it is the holding company of Key Bank, a regional bank based in Cleveland, Ohio. Both have dividend yields well over 4%. Let's take a look at each.

KeyCorp has a yield of 4.47%, which is considerably higher than the financial sector average of around 3.1% and the average yield on the S&P 500, which is about 1.6%. KeyCorp has a payout ratio of 33.6%, which is the percentage of earnings that go toward the dividend. That's a very sustainable number -- indicating that the bank is not allocating too much to its dividend at the expense of other investments in its growth.

It has also been very consistent, raising its dividend for 11 straight years. In the second quarter, KeyCorp paid out a quarterly dividend of $0.19, which is 5% higher than one year ago this quarter.

Citigroup has a similarly high yield of 4.41% based on a current share price of $46. It has an even lower payout ratio than KeyCorp at 28%. In the case of Citigroup, the payout ratio dropped based on strong earnings over the past year and that should provide a nice cushion should the lending environment weaken over the next year or so.

Citigroup currently pays out a quarterly dividend of $0.51, which it has maintained over the last three years. It was the only major bank that didn't raise its dividend after the Federal Reserve lifted restrictions on raising dividends in 2021, preferring instead for share repurchases to maximize the return for investors. The other reason is that Citigroup already had a good dividend, so buybacks made more sense. 

On the first-quarter earnings call, Citigroup CFO Mark Mason reiterated that point, saying: "Given where we're trading, it makes a lot of sense to be doing buybacks. And so, we will likely continue to lean that way as opposed to doing a lot to change the dividend." He said Citigroup will reassess its dividend after the results of its stress test by the Federal Reserve that come out later this year.

How much income would $400 generate?

Let's take a look at how much income these two high-yielding bank stocks would generate with a $400 investment.

If you invested $400 in KeyCorp right now, that would buy you approximately 24 shares. With a quarterly payout of $0.195, each share would generate $0.78 in income. If you owned 24 shares, you'd have about $18.72 in income that could be reinvested back into the fund.

A $400 investment in Citigroup would buy you about nine shares at the current $46 per share. With a quarterly payout of $0.51 per share, this would generate $2.04 per share annually. If you owned nine shares, that would come out to a payout or reinvestment of $18.36. Combined, that comes out to roughly $37 in income annually with a $400 investment in each bank.

The outlook for both of these stocks is good, considering the fact that they are both undervalued and a rising interest rate environment should benefit them. Banks are one of the few industries that typically perform well in a rising interest rate environment as they typically benefit from a boost in interest income. However, this environment is a little different because of high inflation, which, if it led to a continued economic slowdown, wouldn't be as good for banks. The Federal Reserve likely to raise them again this week in an effort to tame inflation.

But overall, these two stocks are good values right now and are in good position to maintain their dividends and generate long-term returns coming out of this current slowdown.