Additionally, dividends are beginning to rise as well. The average financial sector yield dipped to 1.22% in December 2009 from 4.44% in December 2008, and now, yields are back up to 1.8%. The financial sector also makes up about 14.77% of the S&P 500’s overall yield, compared to 9% in 2009. XLF shows a trailing 12-month yield of 1.52%, whereas the S&P 500 has a current yield of about 1.8%.
Looking ahead, Sleeman argues that dividends will continue to rise as regulators relax some of its more stringent rules.
“It’s a huge opportunity for total return to improve,” Sleeman said. “Whether it’s through buybacks, dividends or a combination of both, there’s certainly an opportunity to increase returns to shareholders.”
Financial Select Sector SPDR
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Max Chen contributed to this article.