Traditional banking is a steady business. Collecting deposits and loaning money to consumers and other entities is profitable. However, for some banks, their size and ability to operate across overnight money markets and other business lines makes them very profitable. For those banks, like our latest Best Dividend capture Pick, it can mean steady revenues and rising dividends.
You can check out the Best Dividend Capture Stocks List to explore all the stocks.
As we said, our pick is considered a money-centered bank. In addition to its more traditional banking roles, it also operates as a commercial bank, encompassing operations in wealth management, investment banking, and credit. These different areas generate various revenue streams and feature a wide range of profit margins. This diversification also enables our pick to maintain steady profits. If commercial lending is down, prop trading could be up. This has enabled our pick to build its capital reserves and reinstate a growing dividend following the Great Recession and an increased regulatory environment.
Despite its huge size, our pick has been quite successful in finding growth as well.
In fact, it is doing so by slimming down. After building up a financial supermarket during the post-regulation days and before the Great Recession, our pick has continued to shed assets and become smaller, not in terms of asset size, but in terms of operating business. This is good news for its bottom line. By choosing traditional banking needs and skipping some of the esoteric areas of finance, our pick has increased in size. Customers have once again started to trust the soundness of our pick. All in all, our pick’s size and significance within the banking world, as well as its successful transformation, have enabled it to recover from the depths of the Great Recession.
For investors, this has meant that our pick has also become an excellent dividend capture play. A dividend capture strategy involves buying a stock before its ex-dividend date and then selling it after the payout has been recovered. With an ex-dividend date of Monday, November 3, our pick is well-positioned for the strategy, as evidenced by its historical track record of a recovery period averaging 5.7 days after going ex-dividend.
For investors seeking a combination of total return of income and capital appreciation, our latest banking pick could be a lucrative option.
