Almost a year after publishing my July 20, 2012 article entitled, "7 High-Yield Stocks You Can Bank On," I still believe the United States banking system is awash with liquidity.
Short-term CDs are still delivering sub 1% returns, folks are still largely content to leave their money in banks just to know they won't lose principal. And, each month as I review community bank stocks for my blog, I still find better alternatives for the risk averse investor with some cash to stash.
So here I am! Back with an update on the seven banks profiled in that article, plus seven more for you to consider.
The original seven, ten months later...
As I write this, all of the banks I recommended in last July's article except Bank of McKenney (OTCPK:BOMK) are up solidly, as you'd expect, given the strong market and yield-hungry investors. Hudson City (NASDAQ:HCBK), which was the star of the group, is up 50% and being acquired by M & T Bancorp (NYSE:MTB).
- Compelling buys. High yields and cheap valuations make the Bank of McKenney, as well as Carter Bank and Trust (OTCPK:CARE), Franklin Financial Services (OTCQX:FRAF) and Northeast Indiana Bancorp (OTCQB:NIDB) compelling buys still.
- Solid holds. Peoples United Corp (NASDAQ:PBCT) and Wayne Savings Bancshares (NASDAQ:WAYN) are no longer as attractive at their higher prices, but remain solid holds in my opinion.
Seven more banks that fit the bill, today...
The table below lists seven other solidly performing community bank stocks that offer relatively low-risk investment opportunities at a return much greater than 1%.
Each of the following seven bank stocks:
- Has a dividend yield over 4% - much higher than today's 1% Bank Certificates of Deposits (CDs) and the sub 2% yield on the S & P 500.
- Has fewer than 1.4% of its assets non-performing, with most under 1%.
Trades for less than 150% of book value, despite good asset quality and decent returns on equity.
Why do I believe these bank stocks are pretty safe investments?
- Limited downside. Given the current interest rate environment the high dividend yields should limit selling pressure even if the market declines.
- Clean Slates. In the wake of the US financial meltdown, regulators have thoroughly scrubbed the industry looking for bad loans. Most of the banks that have survived have been subjected to such scrutiny that few problems remain, so we can expect smoother sailing from here.
- Opportunities ahead. Many bank managements are tired after navigating the financial crises and are more willing to sell out after seeing others fail. Acquiring banks are now seeing their share price rise after deals increasing the likelihood that we'll see more mergers going forward.
7 High-Yield Bank Stocks
1. Citizens & Northern Corp (NASDAQ:CZNC)
2. Banco Latinoamericano de Comercio Exterior SA (NYSE:BLX)
3. Trustco Bank Corp (NASDAQ:TRST)
4. Commercial National Financial Corp (OTCQX:CNAF)
5. Oritani Financial Corp (NASDAQ:ORIT)
6. Bridge Bancorp (NASDAQ:BDGE)
7. F.N.B. Corp (NYSE:FNB)
Disclosure: I am long BDGE, BLX, OTCPK:BOMK, OTCPK:CARE, OTCQX:CNAF, CZNC, FNB, OTCQX:FRAF, HCBK, OTCQB:NIDB, PBCT, TRST, WAYN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.