Some of the best opportunities for dividend investors in the financial sector are some of the smallest. Featuring just a few branches and tied to one area, community banks must thrive on their fiscal conservatism. Eschewing risk for stability, these banks — just like our latest Best Dividend Capture Pick — often generate strong returns and cash flows for their shareholders.
You can check out the Best Dividend Capture Stocks List to explore all the stocks.
The key to community banks like our latest pick comes down to ownership. Many community banks are majority founder-owned or family-owned. For our pick, this relationship is special. Our pick is owned and founded by one of the largest labor unions in the nation. That union ownership comes with plenty of fiscal responsibility and mandate. As a result, our pick has managed to generate strong returns for its shareholders over its long history, dating back to the 1920s.
The best part is our pick has managed to find growth as well within its social and fiscal conservative mission
This has included using smart M&A to add other community banks with similar mandates as well as becoming the bank for many other labor unions. This has allowed the small bank to grow into one of the largest stewards of deposits and investment assets in the nation. The bank has also moved heavily into serving the underbanked community, adding low-fee products designed to boost financial literacy and access to its umbrella.
The result is that since our IPO in 2018, it’s continued to generate strong dividend growth for its shareholders, including its latest 16% increase in payout.
With these factors in tow, a strong operating history, and substantial insider ownership, our pick has continued to find investors’ support. As such, it has become a wonderful dividend capture play. A dividend capture strategy involves buying a stock before its ex-dividend date and then selling it after it has recovered the payout. With an ex-dividend date of Tuesday, February 11, our pick is primed for the strategy, as is evident from its historical track record of a recovery period within an average of 1.8 days after going ex-dividend.
For investors looking for a quick total return of income and capital appreciation, our latest community bank play could be a lucrative option.
