NEW YORK (
) -- At a time of continued uncertainty for financial stocks, "safety in dividends" is a recurring theme.
has taken it a step further, identifying 10 banking names with attractive dividend yields that are well-supported by earnings.
With regulatory capital requirements increasing and the industry facing so many challenges, regulators are keeping an eye on banks that are returning capital to shareholders. Companies paying out a high percentage of their earnings in dividends could be forced to cut dividends if their earnings decline.
Some of the most familiar bank stocks that consistently pay attractive dividends have worried investors recently, since their quarterly payouts are nearly as high as their earnings. An example of this is
New York Community Bancorp
, which pays out 25 cents per quarter, which is close to its second-quarter earnings of 27 cents a share.
Then again, the company has paid that dividend through thick and thin, through 29 consecutive quarters, through the second quarter. New York Community Bancorp's dividend yield is 8.33%, based on Friday's closing price of $12, with the shares down 33% year-to-date. We've seen this sort of action with New York Community before, and its mortgage banking revenue can be quite lumpy from quarter to quarter, so this could be an excellent entry point for the shares.
In coming up with our new bank dividend stock list, we have been quite conservative.
Beginning with a list of 130 publicly traded bank and thrift holding companies -- excluding those traded on the Pink Sheets -- with dividend yields greater than 4% as of Friday's market close, we used data provided by SNL Financial to pare down the list by removing those that posted net losses during the second quarter, those for which second-quarter earnings data wasn't yet available, and those with current dividend payouts exceeding 50% of their second-quarter earnings-per-share.
That leaves us with 52 bank and thrift stocks, many of which are thinly traded. We pared the list down further, simply by isolating the 10 names meeting the criteria that are the most actively traded.
This selection approach of "seeing what sticks to the wall," yields a diverse list of companies, although most are centered in the Northeast. A closer look shows that in a couple of cases, even with a low current payout ratio, a dividend could be threatened.
Here are the 10 most actively traded profitable bank and thrift holding companies with yields exceeding 4% that paid out less than half of their second-quarter earnings, sorted by ascending dividend yield: