- Regions Financial (RF - Get Report) of Birmingham, Ala., has gone through a major transition this year, as the company redeemed all $3.5 billion in TARP preferred shares during second quarter, after selling its Morgan Keegan subsidiary and raising $900 million in common equity during the first quarter. The company is currently paying a nominal quarterly dividend of a penny a share. Following the stress tests, Siegenthaler expects regions to increase its quarterly dividend payout to four cents a share, and for the company to buy back $249 million worth of shares during 2013. Shares of Regions Financial closed at $6.25 Wednesday, returning 46% year-to-date, following a 38% decline in 2011. If the quarterly payout were raised to four cents, the dividend yield based on Wednesday's closing price would be 2.56%.
- Zions Financial (ZION - Get Report) of Salt Lake City in September, repaid its remaining $700 million in TARP preferred shares, having repaid $700 million in TARP money during the first quarter. The company is currently paying a quarterly dividend of a penny a share, and following the stress tests, Siegenthaler expects the dividend to be increased to seven cents, and for Zions to be approved to buy back $44 million in common shares during 2013. Zions has seen its stock return 19% year-to-date through Wednesday's close at $19.33, following a 33% decline last year. If the quarterly dividend were increased to seven cents, the shares would have a dividend yield of 1.45%.
- SunTrust (STI - Get Report) of Atlanta had its initial 2012 capital plan rejected by the Federal Reserve, while the company's revised plan didn't include any increased capita return to investors. SunTrust in September took major steps to strengthen its balance sheet, including the sale of its stake in Coca-Cola, which resulted in a third-quarter pre-tax gain of $1.9 billion, as well as transferring about $3 billion in loans to held-for-sale, including some nonperforming loans. These actions and others led to lumpy third-quarter results that raised the company's Tier 1 common equity ratio to 9.80% as of Sept. 30, from 9.40% the previous quarter. SunTrust's shares closed at $25.44 Wednesday, returning 45% year-to-date. Following the stress tests, Siegenthaler expects the company to raise its quarterly dividend to 18 cents a share, which would make for a yield of 2.83% based on Wednesday's closing price. The analyst also expects SunTrust to receive approval to buy back $374 million worth of shares in 2013.
3 Regional Bank Stocks Ready for a Dividend Boost
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