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TheStreet Open House

10 Buy-Rated Bank Stocks With Highest Dividend Yields

Stocks in this article: BAC C NYCB PBCT VLY FMER FNB UBSI TRST PRK UVSP WBCO PVFC CRBC VCBI

1. New York Community Bancorp


Shares of New York Community Bancorp (NYCB - Get Report) of Westbury closed at $13.50 Thursday, returning 5% this year, following a 14% return during 2012. The shares trade for 1.9 times tangible book value and for 13.5 times the consensus 2014 EPS estimate of $1.00. The consensus 2013 EPS estimate is $1.03.

Based on a quarterly payout of $0.25, the shares have a dividend yield of 7.41%.

New York Community Bancorp is rated a B (Good) by TheStreet Ratings.

The company had $44.1 billion in total assets as of Dec. 3 and reported 2012 net income of $501.1 million, or $1.13 a share, increasing from $480.0 million, or $1.09 a share in 2011. The 2012 operating ROA was 1.18%, according to Thomson Reuters Bank Insight, improving slightly from 1.17% in 2011.

The main factor in New York Community's earnings improvement was an increase in mortgage banking income to $178.6 million in 2012 from $80.7 million the previous year. Net interest income in 2012 declined to $631.1 million, from $666.2 million in 2011, as the net interest margin contracted to 3.21% in 2012 from 3.46% the previous year.

New York Community Bancorp's main loan business for decades has been multifamily lending in the New York City area, focusing on rent-controlled or rent-stabilized apartment buildings, with below-market rents. This has led to a remarkable track record of strong asset quality and very low levels of loan charge-offs. The company greatly expanded its single-family mortgage business by purchasing the failed AmTrust Bank of Cleveland from the Federal Deposit Insurance Corp. in December 2009.

The company has maintained the quarterly dividend of $0.25 a share for 36 consecutive quarters, but from time to time over the past several years, some analysts have questioned New York Community's ability to maintain such a high dividend payout ratio.

Guggenheim analyst David Darst in a report on Jan. 30 said "while we feel the dividend is secure for today, we are concerned that the dividend may be at risk later in the year or early next year given our earnings outlook." The analyst has a neutral rating on New York Community, estimating the company will earn $1.06 a share this year, with EPS declining to $1.03 in 2014.

Darst said he expected the company "to grow core earnings over the next two years by deploying liquidity into loans with improving market conditions for core loan growth."

While mortgage banking will typically add earnings volatility, it provides additional revenue diversification, which has been beneficial," he wrote.

NYCB Chart NYCB data by YCharts

Interested in more on New York Community Bancorp? See TheStreet Ratings' report card for this stock.

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

To contact the writer, click here: Philip van Doorn.

To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.

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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