I'm not going to bore you with the bank-by-bank rundown, but the situation is grim. There is good news though. On Wednesday, Dow Jones reported that Goldman Sachs is kind of bullish on bank dividends and that the payouts may be better than many are expecting. Goldman predicts that Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), PNC (NYSE: PNC) and Wells Fargo (NYSE: WFC) have "more dividend upside" than the market’s current view, the Wall Street Journal reported.
Let's hope that's the case because as the chart below indicates, the bank dividend situation as it currently stands isn't pretty.
There's a decent chance we may even see some positive dividend action from the likes of J.P. Morgan Chase and Wells Fargo this year, but for investors eager to gain exposure to the financial services sector whilr getting compensated, there are some noteworthy options that can be taken advantage of right now or further down the road if the market continues to pull back.
One sub-sector of the financial services space to have a look at is business development corporations. These companies don't get a lot of attention from the mainstream financial press and most fall into the small-cap universe, but don't let that dissuade you. The market values may be small with these guys, but yields can be big. Hercules Technology Growth Capital (Nasdaq: HTGC) is one to look as that company recently raised its dividend by 10%.
If you just have to own a traditional bank in your income portfolio, it would be best to make it a foreign one, at least until U.S. bank dividends return to pre-crisis levels and who knows when that's going to happen?
I've previously talked about the strength of select foreign banks and their dividends and have had some success with a couple for Dividend Genius subscribers. Canada would be one market to consider, but for the truly adventurous investor, looking south of the border might be a better dividend deal. Emerging markets are out of favor right now, but that might present an opportunity to at least consider some of Latin America's banks.
Chile's Corpbanca (NYSE: BCA) with a yield of 6.6% is one name to put on your list. The bank recently raised $900 million in capital and with a robust outlook for the Chilean economy going forward, Corpbanca could be a winner.
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