Dividend.com has added a regional bank to the Best Dividend Stocks list. This is the only regional bank that scored high on our DARS rating system. In an interest rate tightening environment, the net interest margins of banks rise when interest rates rise. With the Fed’s decision to ‘wait and watch’ with raising interest rates, it has had a negative impact on regional banks with the SPDR regional banking ETF down 12.6% on a trailing 12-month basis. This stock, however, has outperformed, and it’s up 2.4% during the same period.
The average interest rate tightening cycle, when you consider the last five tightening cycles, is 13.4 months and the average total rate increase has been 2.725%. So far, we have only had a 25 basis points increase in December of last year.
Source:- Camamck Retirement
The regional bank we are adding operates in a state with excellent economic indicators – its unemployment rate is significantly below the national average and its housing market is witnessing solid growth. This has rubbed off on the bank positively, as analysts expect 6.7% growth in EPS for 2017. Along with a 6.6% dividend increase for the investors this year, the bank also announced a $100 million increase to its share buyback program.
To summarize, here are 4 reasons why you should own this stock:
- Excellent economic conditions in the state it operates in.
- Banks do well in an interest rate tightening environment as net interest margins rise.
- The stock has gone up 2.4% on a trailing 12-month basis, while the regional bank ETF has gone down 12.6% for the same period.
- The stock yields a solid 2.77% and has a dividend-paying history since 1998.
Soft Removal of a REIT From the Best Dividend Stocks List
We added a REIT to the Best Dividend Stocks list back in 05/21/15. Since then, the stock has given a 7% price appreciation and yields more than 5%. We are removing this stock from the list but continue to rate it positively at 3.5.