NEW YORK (TheStreet) -- TheStreet has identified a group of 10 actively traded bank stocks with attractive dividend yields that also have room to increase their payouts to investors over the next year.
As we have seen during this difficult year for bank stocks, an attractive dividend yield can provide plenty of support for share prices. The 10 bank dividend stocks we highlight here have all beaten the performance of the KBW Bank Index (I:BKX), which was down 28% year-to-date through Friday.
Of course, a very high dividend yield could signal investor suspicion that a company may need to cut its dividend. This is why it's important to consider how much of its earnings a bank is paying out, and whether it is turning a steady profit.
Hudson City Bancorp (HCBK) is one of the better-known names to bank stock investors seeking a healthy dividend return. The company during the first quarter restructured its balance sheet, as required by regulators, after its long-term leverage strategy of borrowing from the Federal Home Loan Bank and investing the proceeds in securities backfired in the prolonged low-rate environment. Hudson City posted a first-quarter net loss of $555.7 million, and was forced to cut its quarterly dividend payout to eight cents a share, from 15 cents.Hudson City had paid out dividends of more than half its earnings for four out of five quarters, prior to its first-quarter net loss. The shares closed at $5.48 Friday, with the current lowered quarterly payout translating to a dividend yield of 5.84%. In order to come up a very conservative list of bank stocks paying decent and safe dividend yields that have plenty of room to increase their payouts, we have used data provided by SNL Financial to isolate banks and thrifts paying quarterly dividends that posted profits for the past five quarters, while paying out 50% or less of their earnings. We also limited the list to actively traded names with average daily trading volume of at least 50,000 shares. This approach leaves out some of the best-known name among high dividend payers, including New York Community Bancorp (NYB), which has a dividend yield of 8.38%, based on a 25-cent quarterly payout and Friday's closing price of $11.93. New York Community Bancorp's dividend payments have exceeded 90% of its earnings over the past two quarters. Then again, the company has managed to maintain that dividend for 31 consecutive quarters. The forward dividend yields for tour selected group of bank dividend stocks range from 3.01% to 4.97%, and while a yield of just over 3% may seem paltry, it is quite significant when you consider that short-term rates remain near zero. Here are the 10 Bank Dividend Stocks to Be Thankful For, in order of ascending dividend yield:
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $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
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV