NEW YORK ( TheStreet) -- Starting with a list of banks that increased their dividends during the fourth quarter, TheStreet has isolated the ones paying the most to investors, along with discussing three well-known bank dividend stocks.

Most of the five banks we're focusing on earned enough in the fourth quarter to comfortably support additional dividend increases and none of the banks owed bailout funds to the government, but only one - the thinly-traded Norwood Financial ( NWFL)appears to be a bargain at current prices.

SNL Financial provided a list of all the banks increasing their payouts during the fourth quarter, and dividend yields for the group range up to 5.33%, based on Tuesday's market close.

Many of the names we'll discuss are more thinly traded than the bank stocks we usually cover.

For an investor seeking a steady dividend, it's important to consider the direction of a bank's earnings performance at this point in the credit cycle, and whether they currently earn enough to comfortably support the dividend, or can reasonably be expected to do so in the near future.

Three of the most familiar names to dividend-seeking in bank stock investors didn't raise dividends recently, but feature yields that are competitive with the highest yield among the group that raised dividends in Q4:

Valley National Bancorp ( VLY) of Wayne, N.J. has been paying a quarterly dividend of 18 cents since the second quarter of 2006, for a yield of 5.26%, based on Tuesday's closing price of $13.69 a share. Valley National's dividend payout ratio - cash dividend as a percentage of diluted earnings-per-share after extraordinary items - was 75% for the fourth quarter according to SNL Financial and 89% for all of 2010. After the company's fourth-quarter results were announced, David Darst of Guggenheim Securities reiterated his neutral rating on the shares, but said "the current yield appears safe and should reduce downside risk."

New York Community Bancorp ( NYB) of Westbury has been paying a quarterly dividend of 25 cents a share since the second quarter of 2002. Now that's a steady dividend. The yield is 5.32% based on Tuesday's closing price of $18.81 a share. With the purchase of most of the assets of the failed AmTrust Bank late in 2009, New York Community has sufficiently lowered its funding costs and improved its noninterest revenue to comfortably support the dividend, with a payout ratio of 74% in the fourth quarter and 81% for all of 2010, according to SNL. Please see TheStreet's 4 Banks with Growing Revenue for a detailed look at New York Community's revenue improvements.

Hudson City Bancorp ( HCBK) of Paramus, N.J. has been paying a quarterly dividend of 15 cents a share since the second quarter of 2009, when it was increased from 14 cents. The yield is 5.34%, based on Tuesday's closing price of $11.24. The company's dividend payout ratio was 60% for the fourth quarter and 55% for all of 2010. Several analysts have negative opinions on Hudson City because of a narrow net interest margin, however, the company's high efficiency enables it to comfortably support its dividend.

Here are the five banks that raised dividends during the fourth quarter with the highest dividend yields according to SNL Financial, sorted by ascending yield:

If you liked this article you might like

For Banks, Era of 'Too Big to Fail' Is Also Era of 'Too Small to Succeed'

4 Stocks With Most Elite Dividend-Grower Status

Hudson City (HCBK) Stock Falls After M&T Bank Merger Wins Fed Approval

Hudson City Bancorp (HCBK) Stocks Falls After Fed Approves M&T Bank Merger

Hudson City Bancorp (HCBK) Stock Up After Fed Approves M&T Bank Acquisition