This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

5 'Under the Radar' Banks Increasing Dividends

NEW YORK ( TheStreet) -- Starting with a list of banks that increased their dividends during the fourth quarter, TheStreet has isolated the ones paying the most to investors, along with discussing three well-known bank dividend stocks.

Most of the five banks we're focusing on earned enough in the fourth quarter to comfortably support additional dividend increases and none of the banks owed bailout funds to the government, but only one - the thinly-traded Norwood Financial (NWFL - Get Report)appears to be a bargain at current prices.

SNL Financial provided a list of all the banks increasing their payouts during the fourth quarter, and dividend yields for the group range up to 5.33%, based on Tuesday's market close.

Many of the names we'll discuss are more thinly traded than the bank stocks we usually cover.

For an investor seeking a steady dividend, it's important to consider the direction of a bank's earnings performance at this point in the credit cycle, and whether they currently earn enough to comfortably support the dividend, or can reasonably be expected to do so in the near future.

Three of the most familiar names to dividend-seeking in bank stock investors didn't raise dividends recently, but feature yields that are competitive with the highest yield among the group that raised dividends in Q4:

Valley National Bancorp (VLY - Get Report) of Wayne, N.J. has been paying a quarterly dividend of 18 cents since the second quarter of 2006, for a yield of 5.26%, based on Tuesday's closing price of $13.69 a share. Valley National's dividend payout ratio - cash dividend as a percentage of diluted earnings-per-share after extraordinary items - was 75% for the fourth quarter according to SNL Financial and 89% for all of 2010. After the company's fourth-quarter results were announced, David Darst of Guggenheim Securities reiterated his neutral rating on the shares, but said "the current yield appears safe and should reduce downside risk."

New York Community Bancorp (NYB) of Westbury has been paying a quarterly dividend of 25 cents a share since the second quarter of 2002. Now that's a steady dividend. The yield is 5.32% based on Tuesday's closing price of $18.81 a share. With the purchase of most of the assets of the failed AmTrust Bank late in 2009, New York Community has sufficiently lowered its funding costs and improved its noninterest revenue to comfortably support the dividend, with a payout ratio of 74% in the fourth quarter and 81% for all of 2010, according to SNL. Please see TheStreet's 4 Banks with Growing Revenue for a detailed look at New York Community's revenue improvements.

Hudson City Bancorp (HCBK - Get Report) of Paramus, N.J. has been paying a quarterly dividend of 15 cents a share since the second quarter of 2009, when it was increased from 14 cents. The yield is 5.34%, based on Tuesday's closing price of $11.24. The company's dividend payout ratio was 60% for the fourth quarter and 55% for all of 2010. Several analysts have negative opinions on Hudson City because of a narrow net interest margin, however, the company's high efficiency enables it to comfortably support its dividend.

Here are the five banks that raised dividends during the fourth quarter with the highest dividend yields according to SNL Financial, sorted by ascending yield:

1 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AROW $26.41 -0.19%
FNFG $8.78 -0.96%
HCBK $9.30 -1.00%
NWFL $29.64 -4.10%
VLY $9.32 -0.80%

Markets

DOW 18,037.97 -42.17 -0.23%
S&P 500 2,108.92 -8.77 -0.41%
NASDAQ 5,060.2460 -31.8390 -0.63%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs