Financial stocks have historically been stalwarts in the portfolios of individuals interested in dividend investing. Bank stocks have not been in favor with investors since the market crash of 2008. Revenues slumped, profits dropped, and dividends were slashed across the industry. Although dividends are returning o the industry, payouts have become very subpar. There is a bank stock that is still showing investors the money.
The bank in question is M&T Bank Corporation (MTB).
Is M&T Bank A Good Dividend Stock?
M&T is a large regional bank whose asset size rivals that of many of the major banks. The company is primarily based in New York and operates in the eastern regions of the United States.
M&T Bank is one of those banks that has consistently returned cash back to shareholders over the years. M&T Bank is paying a generous dividend of $2.80 per share. That is a 3.3% yield. The current payout rate represents 46% of this year’s earnings. M&T has grown dividends at an 11% clip over the past five years while competitors have seen their dividend growth rates contract.
As its first quarter earnings report demonstrated , the bank has managed to function well in a difficult earnings environment. M&T Bank has done a better job at risk management than most of the national banks. Deposits at the bank grew 6% to over $50 billion dollars. Net interest income rose 2% to $575 million dollars and non-interest income increased 21% to $314 million dollars. Loan loss provision declined nearly 30% and net charge-offs dropped to 0.58%.
M&T has been able to generate over $1 billion dollars in cash from operations each of the past year. The bank’s management team has done a good job of growing the bank’s operations and providing value to shareholders (dividend increases, stock buybacks, acquisitions) as well.M&T’s results were incredibly impressive considering the recent earnings reports of Bank of America and Citigroup.
Shares are currently trading at 14 times earnings and 1.4 time book value. M&T is a steady grower having increased earnings 4.2% over the past five years. The bank may not have the growth potential of some riskier bank plays but it also does not have the high risk level of those institutions as well. M&T is one of those solid dividend stocks that investors can bank on year after year.
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