NEW YORK (
) -- Bank stocks with high-dividend yields have been a favorite subject for
's readers through 2010. With price appreciation for some -- and a recent conversion for one high payer -- the landscape is quickly changing.
Using data supplied by SNL Financial for publicly traded U.S. banks and thrifts -- excluding those traded on the Pink Sheets --
has narrowed down the list to the ten names with the highest dividend yields. Critieria also include stocks that have earnings estimates and price targets available for 2011 and are covered by at least three analysts.
While a yield of at least 4.09% might not be very exciting to some stock investors, it compares favorably to the 10-year U.S. Treasury benchmark bond yield of 3.41% as of Monday's close, as well as the 3.80% yield on
10-year bond that was issued in October. Of course, the common stock investor may also enjoy long-term growth.
The holding company that would have topped our list is
Capitol Federal Financial
of Topeka, Kan., with a dividend yield of 7.54% based on its last quarterly dividend of 22 cents per public share and a closing price of $11.72 Monday. However, the company completed its second-step conversion to full stock ownership on December 21 and its dividend policy will be changing.
According to the offering prospectus, Capitol Federal Financial will pay a one-time special dividend of 60 cents a share, subject to regulatory approval. With a very large capital war chest following the conversion, the company plans to pay-out 100% of its earnings for the next two fiscal years, anticipating a quarterly dividend of about 7.5 cents a share. This would represent a regular dividend yield of 2.56% based on Monday's closing price.
With Capitol Federal strongly capitalized even before it raised $1.2 billion in common equity through the conversion, this is now a growth story for investors.
Here are the ten bank and thrift stocks with high dividend yields meeting our criteria:
For each of the 5 banks discussed on the following pages, we'll be looking at capital strength, earnings quality and asset quality. For an explanation of those terms you can click on the box below.