TFS Financial Stock: Overlooked Bank Stock Pays Triple the Yield of Big Banks Income Investors 2025-07-17 11:32:14 TFS Financial stock offers a steady 8.73% dividend yield. This under-the-radar bank could be a great opportunity for income investors. Dividend Stocks,High-Yield Dividend Stocks,Sector-Specific Dividend Stocks,TFS Financial Corp Stock https://www.incomeinvestors.com/wp-content/uploads/2025/07/business-man-counting-banknotes-in-his-hands-profi-2025-02-19-16-41-55-utc-150x150.jpg

TFS Financial Stock: Overlooked Bank Stock Pays Triple the Yield of Big Banks

TFSL Stock Shines Among Bank Stocks

Today, I’m putting TFS Financial stock in the income investment spotlight.

Let’s be honest: most bank stocks are boring. They don’t generally make the headlines. They don’t shoot up 50% in a week. And they certainly don’t dish out dividend yields that get income investors excited.

Take a look at some of the biggest names in the game. JPMorgan Chase & Co (NYSE:JPM)—one of the best-run banks in the world—pays a dividend yield of around 1.93%. Bank of America Corp (NYSE:BAC) has a dividend yield of 2.2%. You get the idea.

You see, these low yields are fine if you are looking for brand-name recognition. But if you’re an income investor seeking to maximize your cash flow, those payouts aren’t that good.

Now, in contrast to these big banks, take a look at TFS Financial Corp (NASDAQ:TFSL). TFS Financial stock is hardly ever mentioned on CNBC or in the financial headlines. But this small regional bank has been rewarding its shareholders with a robust dividend for years, and at a rate that blows many larger financial institutions out of the water.

What Does TFS Financial Do?

TFS Financial operates as the holding company for Third Federal Savings and Loan, a regional bank headquartered in Cleveland, Ohio. The bank operates through a network of branches and online services primarily focused on individuals rather than large commercial clients.

TFS Financial primarily focuses on residential mortgage lending, offering home purchase and refinance loans, home equity loans, and other related financial services.

Beyond mortgage lending, the regional bank offers savings, money market, checking, individual retirement, and other qualified plan accounts and certificates of deposit (CDs).  In addition, the company offers escrow and settlement services. (Source: “Profile,” Yahoo! Finance, last accessed July 16, 2025.)

In simple terms: TFS Financial doesn’t operate like a major commercial bank. It doesn’t offer complex financial products or hold risky investments. Its business is straightforward and transparent. TFS Financial engages in traditional banking services and aims to make money while providing those services.

TFS Financial Stock Has a Dividend Yield of 8.73%

Now let’s get straight into what income investors care about most: the dividend.

TFS Financial stock currently has a dividend yield of 8.73%. Yes, you read that correctly. This yield is really eye-catching in today’s market.

To give you some perspective, the average dividend yield for the financial sector hovers around 2.5%–3.0%. Even the big names like JPMorgan Chase and Bank of America don’t come close to what TFS Financial stock offers.

In fact, TFS Financial stock offers a yield that’s a few times higher than what you’d get from big banks.

Now, it’s important for income investors to know that this high payout isn’t a temporary spike caused by a falling stock price. TFS Financial has been paying dividends for more than a decade, and the current payout has remained stable for years.

This regional bank stock pays $0.2825 per share quarterly, or $1.13 on an annual basis.

It’s also worth noting here that TFS Financial hasn’t cut its dividend. It has kept paying investors through tough times like the COVID-19 pandemic and the 2023 regional bank crisis that saw institutions like Silicon Valley Bank collapse. This sort of consistency is rare.

TFS Financial Stock Sells at Attractive Valuations

Another compelling reason to look at TFS Financial stock is the valuation.

The stock trades at around $12.95 with a price-to-earnings (P/E) ratio of around 46. This may seem high at first glance, but you have to remember this one thing: most of the company’s earnings are returned to shareholders in the form of dividends. TFS Financial stock isn’t a growth stock; it’s a cash-generating machine. And in that context, the valuation looks a lot more reasonable.

In addition, with interest rates staying elevated, the regional bank should continue benefiting from higher yields on its lending portfolio, and this potentially opens the gate for higher earnings and a higher dividend payment.


Please wait...

Sign up to receive our FREE Income Investors newsletter along with our special offers and get our FREE report:

5 Dividend Stocks to Own Forever

This is an entirely free service. No credit card required. You can opt-out at anytime.

We hate spam as much as you do.
Check out our privacy policy.