NEW YORK ( TheStreet) -- Wells Fargo (WFC), JPMorgan Chase (JPM) and U.S. Bancorp (USB) are usually the first names that come to mind when most bank stock investors think about dividends, but these names are actually in the middle of the pack when it comes to dividend yield.
When these big banks were allowed to increase their dividends earlier this year, it was big news in the banking world, because they were among the biggest and healthiest of the 19 banks subjected to stress tests by the Federal Reserve.
When they got the okay from federal regulators to boost their dividends and increase shareholder buybacks it was seen by markets as a clear signal that the crisis had ended and the banking industry was on the mend. For Bank of America (BAC), which did not get the green light, it was a sign of the struggles to come.
Even for the names seen as healthy, however, investor confidence quickly eroded with the crisis in Europe and ongoing fears of a crackdown on banks by regulators and the courts. Still, the results of that test are compelling. Since March 21, about the time banks began reporting their plans for dividends and buybacks, Bank of America shares have lost more than 50%, versus 28.96% for JPMorgan, 23.55% for Wells Fargo and 10.35% for U.S. Bancorp.You can be sure regulators are keeping a close eye on all the banks these days, however, and others of decent size that make big payouts to their shareholders ought to be in decent shape. For those with the biggest dividend yields, it pays to go down in size a bit. TheStreet took a look at U.S. banks with a market cap of at least $1 billion and found 5 names with a dividend yield of more than 6%. With a 10-year Treasury yield of less than 2%, that's pretty attractive. Nonetheless, you will see that most of these names have a stock chart over the past six months that declines so sharply you would need a rope to climb down it. The sharp declines of these high-yielding bank stocks is somewhat surprising, since investors are clearly attracted to high-yielding names of late as U.S. Treasuries have suffered. Consider Annaly Capital Management (NLY), not a bank stock but a mortgage real estate investment trust. It's shares are up on the year, and the more than 14% dividend yield would seem to have a lot to do with the shares' success. However Annaly shares would get hurt if the Treasury yield curve were to flatten in a "Japan-like scenario," according to an Aug. 2 report from Sandler O'Neill. Banks might be a better relative play under such a scenario. And if the economy strengthens even just a little, banks would appear to offer greater total return potential. Here, then, are the sector's high-yieding names than have a market cap of at least $1 billion.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV