Dividend seeking investors have had their world turned topsy-turvy over the past five years. Prior to the financial crisis, bank stocks were a core part of a diversified dividend portfolio and tech stocks were generally in growth investors' accounts. Now tech stocks like Intel Corporation (INTC) yield over 3% and has consistently increased it payout. Even mighty Apple Inc. (AAPL) has instituted a dividend. Bank stocks, on the other hand, cut their dividend payouts drastically to survive the crisis. Now that the financial system has stabilized, the sector should regain its status as a safe income-producing sector. Below are two stocks income investors should consider. One is a fast growing small bank holding company that should soon start to increase its dividend payout again. The other is a large, well-run Canadian bank that has bypassed the financial crisis all together.
BNC Bancorp (BNCN)
Company description: "BNC Bancorp (BNCN) operates as the bank holding company for Bank of North Carolina that provides commercial banking products and services to individuals, and small and medium size businesses." (Business description from Yahoo Finance)
Here are four reasons why BNCN is a bargain at under $8 a share:
- Earnings are heading in the right direction. The company made 41 cents a share in FY2011 and is on track to make 50 cents a share in FY2012. Analysts project a 50% improvement to 75 cents in EPS in FY2013.
- More impressively analysts expect double digit revenue growth in both FY2012 and FY2013
- The stock is cheap at just 70% of book value and consensus earnings estimates for FY2012 and FY2013 have ticked up over the past two months.
- BNC Bancorp yields 2.6% and I would expect the dividend to go substantially as the company hits earnings projections in 2013.
Canadian Imperial Bank of Commerce (CM)
Company description: "Canadian Imperial Bank of Commerce (CM) provides various financial products and services to individual, small business, commercial, corporate, and institutional clients in Canada and internationally." (Business description from Yahoo Finance)
Here are four reasons CM is a solid pick for income investors at $77 a share:
- The stock yields a robust 4.5% and the company has consistently raise payouts by increments over the past couple of years. It also has an A+ balance sheet.
- BMO Capital Markets just upgraded the shares to "outperform" from "market perform". S&P also has a "buy" rating on the stock as well.
- The company has solidly beat earnings estimates the last two quarters, just announced another dividend hike, and is selling at just over 9 times forward earnings.
- The stock has a very low five-year projected PEG (.97) for a high yielder.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CM over the next 72 hours.