Strategic Buyouts & Diverse Revenues Aid Raymond James Amid Cost Woes

Raymond James Financial Inc. RJF remains well-positioned for growth on the back of opportunistic acquisitions and favorable segment performance, alongside sustainable capital distributions. However, increasing reliance on capital markets for top-line growth and high expenses are headwinds.

RJF’s Growth Drivers

Strategic Acquisitions: Raymond James has been engaged in opportunistic buyouts over the years, which have led to its expansions in Europe and Canada. In October 2025, it announced the acquisition of a majority stake in GreensLedge Holdings, a boutique investment bank recognised for its expertise in structured credit and securitisation, to solidify its capital markets platform. In fiscal 2023, the company acquired Canada-based Solus Trust Company Limited. In fiscal 2022, it purchased SumRidge Partners, TriState Capital Holdings and UK-based Charles Stanley Group PLC, while in fiscal 2021, it acquired Cebile Capital and a boutique investment bank, Financo.

These deals, combined with several earlier deals, will likely position RJF for future growth. Management remains optimistic about pursuing strategic deals in the future to further solidify its Private Client Group (PCG) and Asset Management segments. In May 2024, the company collaborated with Eldridge Industries to foray into the private credit business.

Solid PCG Segment Performance: The majority of Raymond James’ businesses have been performing relatively well amid high competition. The PCG segment remains one of the key contributors to revenue growth. Net revenues in the segment witnessed a compound annual growth rate (CAGR) of 11.4% over the last four fiscal years ended 2025.

In 2016, the company took over the U.S. Private Client Services unit of Deutsche Asset & Wealth Management, adding a substantial amount of client assets to the segment’s balance sheet, thereby aiding its performance.

Encouraging Capital Distributions: Raymond James has been regularly hiking dividends over the last decade, with the latest hike of 11.1% in December 2024. In the same month, it authorized the repurchase of roughly $1.5 billion worth of shares. As of Sept. 30, 2025, $399 million remained available under the repurchase authorization.

Dividend Yield

Given a robust capital position and a lower dividend payout ratio compared with peers, the company is expected to sustain efficient capital distributions, thereby continuing to enhance shareholder value.

Headwinds for Raymond James

Volatile Capital Markets: Raymond James’ excessive reliance on capital markets performance to generate brokerage fees is a concern. Though the fees increased during 2020 and 2021 due to heightened market volatility and client activity, it declined thereafter as the market activity continued to normalize.

Though brokerage fees increased in fiscal 2025, the metric witnessed a negative CAGR of 3.8% over the last four fiscal years (2021-2025). The volatile nature of the capital markets business and expectations that it will gradually normalize toward the pre-pandemic level are likely to make growth less sustainable. 

Elevated Expenses: Raymond James’ expenses have been consistently rising over the years. The company’s non-interest expenses experienced a 9.2% CAGR over the last four fiscal years (2021-2025).

Expenses Trend

The rise has been primarily driven by higher compensation costs and increased bank loan loss provisions. Regulatory changes, technological investments, inorganic expansionary measures and a highly competitive landscape will likely drive expenses higher in the quarters ahead.

RJF currently carries a Zacks Rank #3 (Hold). Year to date, shares of the company have declined 1.5%, underperforming the industry’s growth of 24.7%.

Year-to-Date Price Performance

RJF Peer Stocks Worth Considering

Some better-ranked peers of Raymond James worth considering are Morgan Stanley MS and JPMorgan JPM.

Estimates for MS’ current-year earnings have been revised marginally upward in the past week. The company’s shares have risen 25.5% in the past six months. It currently sports a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks Rank #1 stocks here.

Estimates for JPM’s current-year earnings have been revised marginally upward in the past week. The company’s shares have risen 14.3% in the past six months. It currently carries a Zacks Rank #2 (Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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