The Dividend Daily

Credit card issuer Capital One Financial Corp. (COF) said late Thursday that it swung to its first quarterly profit in a year, easily beating expectations, despite rising loan losses and credit delinquency rates.

The McLean, Virginia-based company reported third quarter net income of $425.6 million, or 94 cents per share, up from $374 million, or $1 per share, in the year-ago period. On average, Wall Street analysts expected a much lower profit of only 14 cents per share.

Capital One aid that credit card delinquencies of 30 days or more soared to 5.38% in the quarter, however, up from 4.2% last year. The charge-off worldwide for credit cards also ballooned to 9.59%, compared with only 6.1% a year ago. Charge-off rate refers to the percentage of loans that a company expects never to be paid back.

To cover mounting loan losses, the company set aside $1.17 billion, up from $1.09 billion last year.

Capital One shares rose $3.06, or +8%, in premarket trading Friday.

The Bottom Line
We recently removed shares of COF from our “recommended” list on Sept.30, when the stock was trading at $35.29. The company has a .52% dividend yield, based on last night’s closing stock price of $38.33. The stock has technical support in the $31-$35 price area. If the shares can continue the recent run, we see overhead resistance around the $43-$46 price levels. We would remain on the sidelines for now.

Capital One Financial Corp. (COF) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.