10 Liquid Bank Stocks With Highest Dividend Yields

NEW YORK ( TheStreet) -- Amid a time of uncertainty for the largest U.S. banks, grappling with a regulatory and political onslaught, TheStreet has identified the 10 actively traded bank stocks with the highest dividend yields, all of which are much smaller than the national players dominating the headlines.

The new list follows TheStreet's much more conservative list of 10 Bank Dividends with Room to Rise, which limited the group to banks paying out a relatively low percentage of earnings over the past five quarters.

In order to come up with this new list of 10 actively traded bank stocks with the highest dividend payouts, we excluded names traded on the Pink Sheets and those with average daily trading volume below 50,000 shares.

Only two of the names appear on both the "conservative" bank dividend stock list and this new list.

Some of these stocks have performed well over the past year, although most have not. When considering this group, it's important to keep your investment objective in mind. If you are looking for income, some of these names have very attractive dividend yields, especially in the prolonged low-rate environment. Then you need to consider how likely it is for the company's earnings to sustain the dividend, while also building or maintaining sufficient capital to keep operating in a stable manner.

None of these 10 holding companies owe bailout funds to the government.

For investors more focused on growth, several of these names have achieved real earnings improvement over the past year and for most of the group, analysts are expecting continued improvement in operating performance this year and in 2012.

All data was provided by SNL Financial. Here are the 10 actively traded bank stocks with the highest dividend yields:

10. Dime Community Bancshares

Dime Community Bancshares ( WSBC) of Brooklyn, N.Y. has seen its stock return 12% over the past year, closing at $13.65 Friday. Based on a quarterly payout of 14 cents, the shares have a dividend yield of 4.10%. Dime had the second-highest yield among TheStreet's conservative list of 10 Bank Dividends with Room to Rise.

The company had $4.1 million in total assets as of March 31, with 26 branches in Brooklyn, Queens and the Bronx, as well as in Nassau County on Long Island.

Dime reported first-quarter net income of $11.1 million, or 33 cents a share, increasing from $9.5 million, or 28 cents a share, during the first quarter of 2010. Earnings were boosted by a decline in the company's provision for loan losses to $1.4 million in the first quarter from $3.4 million a year earlier. Net interest income increased 7% year-over-year, to $35 million.

Dime's first-quarter return on average assets (ROA) was 1.08%, and its dividend payout ratio -- dividends declared divided by earnings-per-share -- was 42% during the first quarter, according to SNL Financial. Dime's payout ratio has been 50% or lower over the past five quarters, which is why the company was included in the list of 10 Bank Dividends with Room to Rise.

After the first-quarter results were announced, Matthew Kelley of Sterne Agee reiterated his neutral rating on Dime Community, saying that the shares were fairly valued, but estimating a "potential terminal value" ranging from $17 to $19 a share, "or 10x-11.5x pro forma 2012 earnings with 25% cost saves."

Kelly lowered his 2011 earnings estimate for Dime by a nickel to $1.29 a share, and his 2012 estimate by six cents to $1.30.

The consensus among analysts polled by FactSet is for the company to earn $1.34 a share during 2011. The shares trade for 10 times the consensus 2012 earnings estimate of $1.41 a share.

Two of the eight analysts covering Dime Community Bancshares rate the stock a buy, while the remaining analysts all have neutral ratings.

9. Chemical Financial

Shares of Chemical Financial ( CHFC) of Midland, Mich., closed at $18.31 Friday, declining 19% over the previous year. Based on a quarterly payout of 20 cents, the shares have a dividend yield of 4.37%.

The company had $5.3 billion in total assets as of March 31, with over 140 branches in the Lower Peninsula of Michigan.

Chemical on April 30 acquired O.A.K. Financial for $83.7 million in stock, bringing on $820 million in total assets and 14 branches in Ottawa, Allegan and Kent counties in west Michigan.

First-quarter net income was $9.2 million, or 33 cents a share, increasing from $2.3 million, or 10 cents a share, a year earlier. The first-quarter provision for loan losses declined to $7.5 million, from $14 million during the first quarter of 2010.

The first-quarter ROA was 0.69% and the dividend payout ratio was 61%. This was the best ROA and lowest payout ratio over the past year.

KBW analyst Christopher McGratty reiterated his "market perform" or "hold" rating for Chemical Financial on April 18 after the earnings announcement, with a target price of $21, saying that the first-quarter results were "solid," and that the company was "well positioned to deploy its excess capital position through acquisitions over the intermediate term."

The consensus among analysts is for the company to earn $1.35 a share for 2011. The shares trade for 12 times the consensus 2012 earnings estimate of $1.56 a share.

All three analysts covering Chemical Financial have neutral ratings on the shares.

8. City Holding Company

Shares of City Holding Company ( CHCO) of Charleston, W.V., closed at $30.93 Friday, with a flat return over the previous year. Based on a quarterly payout of 34 cents, the shares have a dividend yield of 4.40%.

City Holding Company was the highest-yielding bank stock included in our previous list of 10 Bank Dividends with Room to Rise.

During the first quarter, the company repurchased 270,745 common shares at a weighted average price of $34.62, and said that as of March 31, it was authorized to buy back another 294,000 shares.

The company had $2.7 billion in total assets as of March 31, with 68 offices in West Virginia, Kentucky, and Ohio.

First-quarter net income was $9.6 million, or 62 cents a share, increasing from $9.3 million, or 58 cents a share, a year earlier. For both periods, the provision for loan losses was $1.1 million.

Service charge income declined 11% year-over-year to $9.1 million during the first quarter, showing the effects of the Electronic Funds Transfer Act and Federal Reserve Board Regulation E, with the new "opt-in rules" for expensive overdraft protection on ATM and debit transactions and the "implementation of an enhanced customer service providing 'real-time' processing of electronic transactions," combining to reduce checking account service fees.

Despite the fee revenue decline, City Holding Company's first-quarter return on assets of 1.44% was the highest among this group of 10 banks. The company's dividend payout ratio has ranged between 50% and 59% over the past five quarters.

Following the company's first-quarter earnings announcement, Kenneth James of Sterne Agee reiterated his neutral rating on the shares, saying they were likely to remain bound within a range of $30 to $35. The analyst lowered his 2011 earnings estimate by seven cents to $2.44 a share, and his 2012 estimate by 12 cents to $2.64 a share.

The analyst consensus is for City Holding Company to earn $2.48 a share for 2011. The shares trade for 12 times the consensus 2012 earnings estimate of $2.65 a share.

All nine analysts covering City Holding Company have neutral ratings on the shares.

7. First Niagara Financial Group

Shares of First Niagara Financial Group ( FNFG) of Buffalo, N.Y., closed at $13.73 Friday, returning 8% from a year earlier. Based on a quarterly payout of 16 cents, the shares have a dividend yield of 4.66%.

The company on April 15 completed its acquisition of NewAlliance Bancshares of New Haven, Conn., for roughly $1.5 billion in cash and stock, increasing First Niagara's total assets to about $30 billion, with over 300 branches in Connecticut, Massachusetts, Pennsylvania and Upstate New York.

First-quarter net income was $44.9 million, or 22 cents a share, increasing from $28.9 million, or 16 cents a share in the first quarter of 2010. The provision for credit losses declined slightly from a year earlier to $12.9 million.

Pre-provision net revenue for the first quarter was $86 million, increasing 30% from a year earlier, as the company grew its balance sheet 43%, mainly from its acquisitions of Harleysville National in April, 2010.

First Niagara's first quarter ROA was 0.85% and its dividend payout ratio was 73%. The payout ratio has ranged from 64% to 140% over the past year.

The consensus among analysts is for the company to earn a dollar a share in 2011. The shares trade for 12 times the consensus 2012 earnings estimate of $1.15 a share.

With HSBC ( HBC) recently indicating a desire to sell-off its Upstate New York retail branches, David Darst of Guggenheim said in a report on June 1 that First Niagara was looking at another "considerable opportunity" to expand, with other possible acquirers of the branches including M&T Bank ( MTB) KeyCorp ( KEY) TD Bank ( TD) and Capital One ( COF). Darst has a neutral rating on First Niagara, with a $14 price target.

The ten analysts covering First Niagara are evenly split between buy and hold ratings.

6. F.N.B. Corp.

Shares of F.N.B. Corp. ( FNB) of Hermitage, Pa., closed at $10.18 Friday, returning 25% over the previous year. Based on a quarterly payout of 12 cents, the shares have a dividend yield of 3.72%.

The company had $9.8 billion in total assets as of March 31, with over 220 branches in Pennsylvania and Ohio. F.N.B raised $54.6 million through a public offering completed in May.

First-quarter net income was $17.2 million, or 14 cents a share, increasing from $16 million, or 14 cents a share, in the first quarter of 2010. The first-quarter ROA was 0.71% and the dividend payout ratio was 86%, which was the highest payout ratio over the past five quarters.

On May 31, Andy Stapp of B. Riley upgraded his rating on F.N.B. Corp. to a "buy" from a neutral rating, with a price target of $11.25, saying that the company had "realized seven consecutive quarters of loan growth." Stapp said he expected the loan growth to "accelerate over time as trucking companies, pipe manufacturers and other customers that stand to benefit from the development of the Marcellus shale play invest in their businesses."

The consensus among analysts is for F.N.B. to earn 70 cents a share for 2011. shares trade for 12 times the consensus 2012 earnings estimate of 84 cents a share.

Among the ten analysts covering F.N.B. Corp., three rate the shares a buy, while the remaining analysts all have neutral ratings.

5. TrustCo Bank Corp.

Shares of TrustCo Bank Corp. ( TRST) of Glenville, N.Y., closed at $5.53 Friday, down 5% from a year earlier. Based on a quarterly payout of 7 cents, the shares have a dividend yield of 4.75%.

There are no sell-side analysts currently covering TrustCo. The shares trade for 1.7 times tangible book value and 14 times trailing earnings, according to SNL Financial.

The company had $4 billion in total assets as of March 31, with 134 branches in Upstate New York and Florida, with a presence in Vermont, Massachusetts and New Jersey.

First-quarter net income was $7.4 million, or 10 cents a share, increasing from $6.9 million, or nine cents a share, in the first quarter of 2010. Credit costs continue to place a drag on earnings, with a $4.6 million provision for loan losses during the first quarter, declining slightly from $4.7 million a year earlier.

The first-quarter ROA was 0.74% and the dividend payout ratio was 66%. The payout ratio has ranged between 60% and 73% over the past year.

TrustCo on May 19 filed a shelf registration, for the sale of up to $125 million in securities, planning to use any capital raised for general corporate purposes.

TrustCo has achieved consistent, decent earnings performance and asset quality over the past year, although the shares would appear not to have a catalyst for strong returns over the short term.

Based on the shelf registration and the company's presentation at its annual meeting in May, the company's management can be expected to seek an acquisition or continue with its plans for organic growth. The dividend seems reasonably safe.

One long-term investor in TrustCo told TheStreet that there seems to be "nothing going on with the company, which is emblematic of the weak Upstate New York economy."

4. People's United Financial

Shares of People's United Financial ( PBCT) of Bridgeport, Conn., closed at $12.83 Friday, down 3% over the previous year. Based on a quarterly payout of 16 cents, the shares have a dividend yield of 4.91%.

People's United had $25 billion in total assets as of March 31, with about 340 branches in Connecticut, Vermont, New York, New Hampshire, Maine and Massachusetts.

In January, the company announced a deal to acquire Danvers Bancorp ( DNBK) of Danvers, Mass., for $493 million in cash and stock. The deal is expected to be completed this month. Danvers Bancorp had $2.8 billion in total assets as of March 31, with 28 branches in the Boston area.

People's United reported first-quarter net income of $51.7 million, or 15 cents a share, increasing from $13.6 million, or 4 cents a share, a year earlier, mainly reflecting an increase in interest income, with the acquisitions of Smithtown Bancorp in November, the failed Butler Bank of Lowell, Mass., in April 2010, and Financial Federal Corp. in February 2010.

While interest and dividend income increased 31% year-over-year to $252.8 million in the first quarter -- partially from "interest accretion from the Financial Federal" -- interest expense actually declined slightly. First-quarter net interest income was up 38% to a tax-adjusted $221.5 million, according to SNL.

After the company announced its first-quarter results, David Darst of Guggenheim Securities reiterated his neutral rating for People's United, with a $14 price target, saying that positive catalysts for the shares "may include a larger acquisition in the $5-8 billion range, continued aggressive share repurchases, and strong organic growth in the Boston, Long Island, and New York City markets in addition to growth in the legacy footprint."

The consensus among analysts is for People's United to earn 66 cents a share in 2011. The shares trade for 15 times the consensus 2012 earnings estimate of 85 cents a share.

Out of 15 analysts covering People's United, six rate the shares a buy, while the remaining analysts all have neutral ratings.

3. United Bankshares

United Bankshares ( UBSI) of Charleston, W.V., has seen its stock decline 12% over the past year, closing at $22.82 Friday. Based on a quarterly payout of 30 cents, the shares have a dividend yield of 5.26%.

The company had $7.2 billion in total assets as of March 31, with 111 branches in West Virginia, Virginia, Washington, D.C., Maryland and Ohio.

United Bankshares agreed in December to acquire Centra Financial Holdings of Morgantown, W.V., in an exchange of shares valued at $187 million. Centra Financial has about $1.3 billion in total assets, with 15 branches in West Virginia, Maryland and Pennsylvania. The deal is expected to be completed early in the third quarter.

First-quarter net income was $17.9 million, or 41 cents a share, increasing from $17.4 million, or 40 cents a share in the first quarter of 2010. The company's first-quarter ROA was 1.01% according to SNL. The dividend payout ratio for the first quarter was 73%, and the payout ratio has ranged between 68% and 75% over the past five quarters.

Following the first-quarter earnings announcement, Kenneth James of Sterne Agee reiterated his neutral rating on United Bankshares, saying the company had achieved "solid performance," and that its long-term aspects were favorable "given a disciplined acquisition strategy combined with the ongoing franchise shift into more attractive northern VA/D.C." The analyst's neutral rating reflects a valuation that is at a premium to peers and limited upside potential over the next year.

James said his firm views "the shares as suitable for long-term investors with an equity-income focus, but would prefer a more attractive entry point." Considering that the shares have pulled back 12% from the closing price of $25.86 on April 27 when the Sterne Agee report was published, we may be at the "more attractive entry point."

The consensus among analysts is for the company to earn $1.63 a share in 2011. The shares trade for 13 times the consensus 2012 earnings estimate of $1.84 a share.

All nine analysts covering United Bankshares have neutral ratings on the stock.

2. Valley National Bancorp

Shares of Valley National Bancorp ( VLY) of Wayne, N.J., closed at $13.10 Friday, with a flat return over the previous year. Based on a quarterly payout of 17 cents, the shares have a dividend yield of 5.27%. The company paid a special 5% stock dividend to shareholders of record, as of May 20.

Valley had $14.4 billion in total assets as of March 31, with roughly 200 branches in northern and central New Jersey and the boroughs of Manhattan, Brooklyn and Queens, in New York. The company has a deal in place for a major expansion into the Long Island market, agreeing on April 29 to acquire State Bancorp ( STBC) of Jericho, N.Y., for $222 million in stock.

As part of the agreement, Valley will repay the $37 million in bailout funds that State Bancorp owes the government for assistance received through the Troubled Assets Relief Program, or TARP. SNL Financial values the merger deal -- including the TARP repayment -- at roughly two times tangible book value, which is a solid premium in the current environment for community bank M&A.

State Bancorp's CEO Thomas O'Brien recently discussed with TheStreet the market conditions on Long Island, regulatory challenges faced by community banks and his company's decision to sell.

Valley reported first-quarter net income of $36.6 million, or 22 cents a share, increasing from $27.4 million, or 16 cents a share, a year earlier. The earnings improvement mainly reflected $16.2 million in loss-sharing reimbursements from the Federal Deposit Insurance Corp., covering losses on problem loans acquired from the failed LibertyPointe Bank and Park Avenue Bank, both of New York, in March 2010.

Valley's first-quarter dividend payout ratio was 78%, and the payout ratio has ranged from 75% to 108% over the past year.

The consensus among analysts is for Valley to earn 83 cents a share in 2011. The shares trade for 41 times the consensus 2012 earnings estimate of 93 cents a share.

Following the announcement of the State Bancorp deal, David Darst of Guggenheim Securities reiterated his neutral rating for Valley, saying the pricing of the acquisition followed "recent trends for deals in the Mid-Atlantic and Northeast," and that the transaction was significant, extending "VLY's franchise into Long Island, a market with strong demographics and population density."

Out of nine analysts covering Valley National Bancorp, two rate the shares a buy, six have neutral ratings and one analyst recommends selling the shares.

1. New York Community Bancorp

Shares of New York Community Bancorp ( NYB) of Westbury, N.Y., closed at $15.74 Friday, returning 5% over the previous year. Based on a quarterly payout of 25 cents, the shares have a dividend yield of 6.35%.

The company had $41 billion in total assets as of March 31, with 276 branches in New York, New Jersey, as well as in Florida, Arizona and Ohio, which New York Community expanded into as part of its acquisition of the deposits and some of the assets of the failed AmTrust bank in December 2009.

New York Community reported first-quarter net income of $123.2 million, or 28 cents a share, declining from $124.1 million, or 29 cents a share earlier. The ROA for the first quarter was 1.21%. The dividend payout ratio for the first quarter was 89% according to SNL, and has ranged between 74% and 86% over the past five quarters.

First-quarter earnings declined from 34 cents a share in the fourth quarter, which CEO Joseph Ficalora said reflected a decline in mortgage banking income "due to a substantial decline in residential refinancing activity as mortgage interest rates rose throughout the quarter, and to the continuation of very weak home purchase activity across the United States," as well as an increase in the loan loss provision "in connection with the reappraisal of properties collateralizing certain large loan relationships."

The shares pulled back 4% from April 18 -- before the first-quarter earnings announcement -- through Friday's market close, possibly reflecting concern with the relatively high dividend payout ratio. We've seen this before, when the shares dipped so low late in 2009, that the dividend yield -- based on the same 25-cent quarterly payout -- was in excess of 9%.

It's important to point out that New York Community has been able to maintain its quarterly payout, through thick and thin, for the past 28 quarters. With the AmTrust acquisition, the company was able to reduce its reliance on wholesale borrowings and improve its net interest margin. The AmTrust deal also brought a new one-to-four family residential mortgage business, supplementing the company's traditional focus on multifamily mortgage lending in New York City.

Of course, the uncertain economy can make for lumpy mortgage banking revenue, which totaled $19.9 million in the first quarter, declining from $40.4 million in the fourth quarter and $27.5 million in the first quarter of 2010.

The consensus among analysts is for the company to earn $1.18 a share in 2011. The shares trade for 12 times the consensus 2012 earnings estimate of $1.32 a share.

Following the first-quarter earnings announcement, Guggenheim Securities analyst David Darst reiterated his "buy" rating for New York Community, with a $20 price target, although he lowered his 2011 earnings estimate by a nickel to $1.26 a share and his 2012 estimate by 2 cents to $1.40, also estimating "normalized earnings" of $1.60 a share.

The analyst said that his firm expects "investors will earn a 20%+/- total return over the next 12 months from the current price and valuation levels." Darst added that "the 6% dividend yield is secure and is a key component of investor return."

Out of 19 analysts covering New York Community Bancorp, 11 rate the shares a buy, seven have neutral ratings and one analyst recommends selling the shares.

>>To see these stocks in action, visit the 10 Liquid Bank Stocks With Highest Dividend Yields portfolio on Stockpickr.

-- 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.

To submit a news tip, send an email to: tips@thestreet.com.
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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