5 Buy-Rated Bank Stocks With Safe and Solid Dividends (Update 1)

1. Dime Community Bancshares

Dime Community Bancshares (DCOM) of Brooklyn, N.Y., has seen its stock return 3% year-to-date through Monday's close at $12.74, following a 10% decline last year. Based on a 14 cent quarterly payout, the shares have a dividend yield of 4.40%.

The shares trade for 1.4 times tangible book value, and for 11 times the consensus 2013 EPS estimate of $1.19. The consensus 2012 EPS estimate is $1.20.

The company had $4.0 billion in total assets as of March 31, and earned $10.2 million, or 30 cents a share during the first quarter, declining from $12.7 million, or 38 cents a share, in the fourth quarter, and $11.1 million, or 33 cents a share, in the first quarter of 2011. The sequential earnings decline reflected a seasonal spike in employee compensation expenses, as well as an increase in other expenses. The earnings decline also reflected the continued narrowing of Dime's net interest margin, to 3.47% in the first quarter, from 3.54% the previous quarter and 3.62% a year earlier, following the industry trend in the prolonged low-rate environment.

Sterne Agee analyst Matthew Kelley has a neutral rating on Dime Community Bancshares, saying on May 3 that he expects "the core net interest margin (ex prepayment penalties) will decline by 12 basis points (bp) in 2012 to 3.23%, and by an additional 10 bp in 2013 to 3.13%," adding that "the company's average yield on real estate loans equaled 5.62% in the most recent quarter; this compares to current multi-family origination rates in the 3.50%-4.00% range," and that "asset yield compression will continue to outpace funding cost reductions over the next several quarters."

Kelley expects the company to earn $1.21 a share this year, followed by earnings of $1.12 during 2013.

Barclays analyst Mark DeVries has a more positive view of Dime, with an "Overweight" rating and a $15 price target, saying on April 27 that "given the difficult interest rate environment, we believe DCOM has prudently managed its portfolio growth and interest rate risk," and that an improved loan pipeline of $145 million as of March 31 suggested "improved growth in 2Q12 as DCOM deploys excess liquidity."

DeVries estimates that Dime Community Bancshares will earn $1.26 a share during 2012 followed by 2013 EPS of $1.28.

Raymond James analyst Anthony Polini late on Tuesday cut his rating for Dime to to "Underperform" from "Market Perform," while leaving his 2012 EPS estimate of $1.20 and his 2013 EPS estimate of $1.15, unchanged.

Polini said that the company's "superior credit quality and balance sheet strength will likely take a back seat to a relatively weak outlook for EPS growth and a relatively high valuation."

Interested in more on Dime Community Bancshares? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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