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Banks Heading Into Dividend Sweet Spot: KBW

PNC has been one of the weakest of the large-cap bank stocks this year, with shares down 1% year-to-date through Friday's close, while the KBW Bank Index (I:BKX) was up 25% to 49.33. Then again, PNC held up quite well during a rough 2011 for bank stocks, dipping only 3%, while the KBW Bank Index dropped 25%.

Fifth Third Bancorp (FITB - Get Report) is in third place on Cannon's list of large-cap banks expected to see significant dividend growth in 2013, with the yield on common shares expected to rise to 3.58%, from the current yield 2.2.75%, based on a 10-cent quarterly payout and Friday's closing price of $14.53. Cannon expects Fifth Third to pay dividends totaling 52 cents a share in 2013.

For more aggressive investors, KBW's list of "High-Yielding Stocks in 2013," includes at the top Chimera Investment Corp. (CIM - Get Report), a real estate investment, with a current dividend yield of 13.09%, based on a nine-cent quarterly payout and Friday's closing price of $2.75. KBW is expecting the payout to remain the same in next year, with the shares pulling back by 5%, for a 2013 dividend yield of 13.1%. Of course, a surprising acceleration in the U.S. economy and/or a change in policy by the Federal Reserve could lead to a reversal in the direction of interest rates, and a change in KBW's outlook.

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

>Contact by Email.

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 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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C $46.73 -1.16%
CIM $14.16 0.43%
FITB $18.49 -1.30%
JPM $63.60 -0.80%
PNC $88.19 -0.90%


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