There have been two recessions over the past 20 years. One, the Great Recession from 2007-2009 was one of the longest ever, while the other, the COVID-19 recession from February to April 2020, was one of the shortest, but most severe, literally stopping the nation in its tracks for several months.
The financial sector was hit particularly hard as banks saw lending dry up and, during the COVID recession, were hammered by heavy credit-loss provisions, which were a major drag on earnings. Further, investment managers saw their asset levels plummet due to tanking stock prices and outflows, which hurt their earnings.
Yet, some financial stocks survived both recessions without reducing their dividends. Here are three stocks that weathered the last two recessions while maintaining their dividends.
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T. Rowe Price
T. Rowe Price (TROW +0.51%) might not be the first stock you think of when you think of investment managers, but it should be the first when you think of dividend stocks in the sector.
T. Rowe Price has increased its dividend for 40 years in a row, which covers not only the last two recessions but also the dot-com recession of the early 2000s, the Gulf War recession of the early 90s, and the Black Monday stock market crash in 1987.
NASDAQ: TROW
Key Data Points
What makes T. Rowe Price an elite dividend stock is its clean balance sheet. The company carries virtually no debt, which means it typically has ample capital available, regardless of market conditions, to maintain its dividend.
It is currently paying out a ridiculously high yield of 4.89% at a payout ratio of 49%.
Franklin Resources
Franklin Resources (BEN +1.57%) is the holding company for Franklin Templeton Investments, among other money management firms. Like T. Rowe Price, it has a long streak of increasing its dividend, doing so for 29 straight years. Currently, it pays out a high yield of 3.92% with a payout ratio of 46%.
Franklin has been able to navigate the market's ups and downs and maintain its dividend because of its balanced, diversified structure. It owns multiple investment managers across equity, fixed income, and alternative strategies, which have allowed it to float steadily, maintaining decent cash flows in any market.
NYSE: BEN
Key Data Points
Also, Franklin, while not on the level of BlackRock, Vanguard, and others, has significantly more ETF assets than T. Rowe Price, and that has helped it outperform over the past three- to five-year period.
M&T Bank
M&T Bank (MTB +0.70%) was one of the very few bank stocks that raised its dividend during the COVID recession. Most banks were cutting their dividends, while others managed to hold them in check. This was in line with Federal Reserve mandates, which temporarily banned share buybacks and capped banks' dividends at their level in the second quarter of 2020, when the pandemic hit.
M&T Bank maintained its $ 1.10-per-share payout throughout 2020 and into 2021, then raised it to $1.20 per share in Q4 2021 after the dividend cap was lifted.
NYSE: MTB
Key Data Points
It was similarly strong during the Great Recession. The bank raised its dividend to $0.70 per share in late 2007, and maintained it at $0.70 throughout 2008 and 2009 -- the heart of the recession -- and beyond. In fact, M&T Bank kept its dividend unchanged for nine consecutive years through 2016. It finally boosted its dividend to $0.75 per share in 2017 and has raised it for the past nine years in a row.
M&T Bank was able to navigate these storms because of its conservative, risk-averse lending and underwriting, and its cautious strategy of maintaining moderate dividend payouts during the 2010s bull market. It maintained low payout ratios throughout the bull market, which gave it an ample cushion during the pandemic.
All three of these stocks would be solid bets to at least maintain their dividends if things get rocky, based on their histories.
