3 Regional Bank Stocks Ready for a Dividend Boost
NEW YORK (TheStreet) - Following the next round of Federal Reserve stress tests for the nation's largest banks, three large regional players should finally provide some dividend relief to long-suffering investors.
Credit Suisse analyst Craig Siegenthaler late on Wednesday said in a report that "we expect aggregate capital deployment levels to increase by 63% in 2013" year-over-year, for the 17 regional banks covered by the firm. The increased capital return to investors will include a 28% year-over-year increase in dividends, as well as a 116% increase in buybacks, according to the analyst, who said his estimates "exclude capital deployment through net debt reductions and M&A."
While Siegenthaler's 2013 capital return estimates "are roughly in-line with sell-side forecasts (and we remain cautious on the industry)," he is expecting that company press release announcing divided increases and share repurchases "will have a modest net positive impact on the stocks in March '13 as income investors increase allocations to bank stocks."
Income-seeking investors, are of course, hard-pressed these days, with long-term interest rates at historical low, while the Federal Reserve does everything it can to keep them that way. Another consideration for investors considering bank dividend stocks is the buying opportunity following recent weakness in bank stocks, as investors fret over the election results and the uncertainty over the "fiscal cliff" continues.
The KBW Bank Index (I:BKX) declined 9% from Nov. 6 through Wednesday's close at 46.68.