NEW YORK ( TheStreet) -- With investors concerned over a recent dividend cut by Hudson City Bancorp (HCBK - Get Report) and a high first-quarter dividend payout ratio for New York Community Bancorp (NYB), TheStreet has identified a group of 10 bank stocks with decent dividend yields and relatively low payout ratios.
After regulators forced Hudson City Bancorp to restructure its balance sheet as the company's long-term leverage strategy of borrowing from the Federal Home Loan Bank of New Yorkand investing the proceeds in securities backfired in a prolonged low-rate environment, the company announced a first-quarter net loss of $555.6 million and reduced its quarterly dividend to 8 cents a share, from 15 cents a share.
The Wall Street Journal on Monday discussed New York Community Bancorp's attractive dividend yield of 6.2% in its Heard On The Street Column, saying investors were concerned over the bank's first-quarter payout ratio, which TheStreet discussed on April 19, after the company reported first-quarter earnings of $123.2 million, or 28 cents a share, while paying a quarterly dividend of 25 cents a share.
In order to come up with a list of 10 bank stocks with attractive dividend payouts that are well-supported by earnings, we isolated the 10 holding companies with the highest forward dividend yields, that also paid out less than half of their earnings for the previous five quarters.All data was provided by SNL Financial, and we only included names with three-month average daily trading volume of more than 50,000 shares. In addition to excluding New York Community Bancorp, this conservative approach excludes many of investors' other favorite bank stocks with generous dividend payouts, including , Valley National Bancorp (VLY), with a dividend yield of 5.08%, based on a quarterly payout of 17 cents and Monday's closing price of 13.51; People's United Financial (PBCT), with a dividend yield of 4.74%, based on a 16-cent quarterly dividend and Monday's closing price of $13.30; and First Niagara Financial (FNFG), with a dividend yield 4.69%, based on a 16-cent quarterly dividend and Monday's closing price of $13.66. Here are our ten conservative bank dividend stock selections: