Three Bank Stocks With Outsized Dividends

NEW YORK ( TheStreet) -- A select group of bank stocks are paying outsized dividends and remain values while their larger peers are in danger of topping out in the stock-market rally.

The biggest banks are paying next to nothing. Investors get zilch from Citigroup ( C). Bank of America ( BAC) and Wells Fargo ( WFC) flip a few coins to stockholders. Even the high-flying JPMorgan Chase ( JPM) pays a nominal quarterly dividend of five cents a share.

Following's recent look at three undervalued banks, which was based on price-to-book ratio, asset quality and consistency of earnings, here are three banks in good financial shape that pay dividends that would be compelling in a bull or a bear market: New York Community Bancorp ( NYB), United Bankshares ( UBSI) and Capitol Federal Financial ( CFFN).

We limited our selection to banks that aren't participating in the Troubled Asset Relief Program with nonperforming assets that are less than 1.5% of the total. Also excluded were a few high-dividend payers with low stock-trading volume. SNL Financial provided the data.

New York Community Bancorp

New York Community Bancorp, which does business in New York state and parts of New Jersey, pays 25 cents a share, translating to a yield of 9.43%.

The company has paid that dividend since the second quarter of 2002, but the stock has languished. That reflects investor concerns the payout may be cut, since the company's ratio of cash dividends paid over income before extra items exceeded 100% over the past three years and the first three quarters of 2009.

Chief Executive Officer Joseph Ficalora has said repeatedly that New York Community is "genuinely committed" to maintaining the dividend, and with the company's common equity boosted by $99 million in third-quarter earnings, an exchange of preferred shares, along with the issuance of $65 million in common shares through direct purchases of additional shares by stockholders, the company's tangible common equity ratio increased to 6.03% as of Sept. 30, from 5.59% in the previous quarter.
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