The banking industry has lagged the market for an extended period.

Major financial institution JPMorgan Chase (JPM) - Get Report has declined 0.6% over the past year, while the S&P 500 is up 5.7%.

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The reason why big banks have under-performed is that profits have stagnated, driven by low interest rates.

This means JPMorgan Chase has an attractive valuation, and it also offers an above-average dividend yield of 2.92%.

But make no mistake, JPMorgan Chase is a high-quality blue-chip stock. The company traces its roots back to 1871.

JPMorgan Chase was a Dividend Aristocrat from 1990 through 2000, but the company didn't increase its dividend in 2002. Dividend Aristocrats are 50 stocks that have paid dividends for 25-plus consecutive years.

The company was forced to cut its dividend in 2009 during the worst of the financial crisis.

JPMorgan Chase has increased its dividend every year since 2010 and pays more dividends per share, accounting for share splits, than at any other time in its history.

The company appears ready to go on another multi-year tear of dividend increases. JPMorgan Chase maintains a low payout ratio of just 34%, leaving plenty of room for more dividend increases.

Over time, sentiment surrounding the stock is likely to change, because JPMorgan Chase has plenty of future catalysts that should work in its favor.

The short-term picture remains challenging, but JPMorgan Chase's dividends and earnings should continue to grow for many years to come.

First and foremost, JPMorgan Chase will benefit from rising rates. Low rates are a headwind for major financial centers such as JPMorgan Chase because traditional banking activity relies on the spread between short-term interest paid on deposits and interest earned on long-term loans.

For example, JPMorgan Chase accepts short-term deposits and pays interest and then uses the deposits to issue longer-dated loans such as auto loans and mortgages that collect interest. Higher rates will help the company expand profitability because auto and mortgage rates will increase at a faster rate than short-term deposits.

Thus far, the Federal Reserve has kept rates very low, which has negatively affected the banks. For example, last year wasn't an especially strong year for JPMorgan Chase.

Total revenue declined 1.6%, to $93.5 billion. However, the company was successful in cutting costs, which at least provided 13% earnings growth.

As the nation's biggest bank by net assets, JPMorgan Chase has a great deal of scale. This allows it significant financial flexibility to reduce expenses when necessary to continue generating earnings growth.

JPMorgan Chase reduced its headcount by nearly 7,000 employees last year. It slashed non-interest expense by $2 billion for the year, which allowed the company to increase dividends and earnings.

This year, conditions have picked up a bit. Revenue and earnings per share increased 3% and 1%, respectively, last quarter.

Rates have ticked up slightly this year, thanks to the Fed's decision to raise rates in December.

This propelled 6% growth in JPMorgan Chase's net interest income in the second quarter, which is a promising sign of things to come should the Fed raise rates again this year. Once again, JPMorgan Chase's cost-cutting efforts worked well.

Non-interest expense declined another 6% in the second quarter, year over year.

The other major catalyst from which JPMorgan Chase will benefit is the gradual improvement in the U.S. economy. As a major lender, JPMorgan Chase needs a healthy consumer to build the business.

As the housing and labor markets continue to firm across the country, JPMorgan Chase's loan activity is growing. In the second quarter, core loan growth was 16%, due to strong activity in mortgages and commercial real estate.

Even though the returns on these loans is abnormally low due to persistently low rates, this stands to change if and when the Fed hikes rates again.

Finally, JPMorgan Chae has maintained a high-quality loan portfolio. It generated an 11.9% Common Equity Tier 1 Ratio, which is considered a key regulatory measure.

As a financial institution deemed too-big-to-fail, it is important for JPMorgan Chase to effectively manage its balance sheet. With a strong ratio, JPMorgan Chase should be able to withstand a downturn in the U.S. economy, and it passed this year's stress test with flying colors.

JPMorgan Chase has been weighed down by low rates, but this is a short-term issue. In the meantime, it is a cheap stock with a hefty dividend that pays investors well to wait.

The stock trades for a trailing price-earnings ratio of 11.1 and a forward P/E ratio of 10.6. These are extremely cheap levels in relation to the broader market, as the S&P 500 as a whole trades for an average P/E ratio near 20.

In addition, JPMorgan Chase is a strong dividend stock. 

The company recently raised its dividend by a healthy 9%. As a result, JPMorgan Chase is an attractive stock pick for both income and value investors.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.