The big national banks garner all of the headlines from the news organizations because of their risky loan portfolios and pending lawsuits. Many of the regional banks go unnoticed despite having avoided much of the fallout from the financial crisis. Many of the regional banks are still paying out great dividends each quarter and have really high yields that make them attractive to those looking for income. Let’s take a look at four regional banks that could quickly become a favorite of income investors.
Bank Dividend Yields
First Niagara Financial Corporation
At first glance, First Niagara Financial Corp (FNFG) looks like a risky company but the bank actually has done a great job of managing risk with its loan portfolio. First Niagara is one of a few banks that has actually increased its dividend in recent years with the average dividend growth coming in at over 17%. First Niagara has a quarterly dividend payout rate of 16 cents per share and has a remarkable yield of 6.8%. The current dividend payout is 85% of earnings which is a high payout rate. The dividend payout rate drops to 62% of this year’s projected earnings. An added bonus is that the stock is trading at just three fourths of book value.
New York Community Bancorp
New York Community Bancorp (NYB) is the mid sized bank with the big dividend yield. The multi-bank holding company is centered in New York and provides banking services across four different states. New York Community Bancorp pays out a quarterly dividend of 25 cents per share and has a dividend yield of 8%. New York Community Bank has been paying out a dividend for the past 18 years. The current dividend payout rate of 84% does bear watching because the payout rate is incredibly high and does not leave much room at all for dividend growth.
M&T Bank (MTB) is one of the safer regional banks in the market. The bank has demonstrated its financial strength by not being forced to lower its annual dividend as so many other banks have in recent years. M&T Bank is currently paying a 70 cent dividend per quarter. The stock is yielding 3.8% which makes it a great dividend stock. Since the dividend payout rate is just 40% of this year’s earnings, there is continued room for growth.
FirstMerit Corporation (FMER) is a bank that very few people know about. More investors should take note of the company and its dividend. FirstMerit Corporation just recently increased its dividend 8.3%. The company has a quarterly dividend payout of 16 cents per share which represents a 5% annual dividend yield. The dividend payout rate is 64% of earnings. FirstMerit is attractive to investors because of its rich dividend and low valuation. Shares are trading below tangible book value.