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6 Bank Stocks With Big Dividends
On March 8, Bank of America (NYSE:BAC) announced that it is going to pay out $12 billion in dividends within two years. It's wonderful news for shareholders who've seen the quarterly dividend cut from 64 cents prior to the 2008 crisis to just a penny today. But why wait two years when you can buy ADRs in Australia
Westpac Bank and Other ForeignMoney Center
Background
Westpac got its start 194 years ago and today is one of the most successful banks anywhere. Operating five divisions that serve 11.8 million customers, it is solidly profitable and suffered little damage from the 2008 financial crisis that hit most American banks. Most intriguing is the fact that its CEO is a woman. That's a rarity in the banking world, especially in a company the size of Westpac. As an organization, Westpac has set a goal to have women occupy 40% of its 4,000 senior management roles by 2014 in order to comply with new Australian stock exchange guidelines that are designed to encourage gender equality in business. Currently, about 33% of these roles are filled by women. Too bad North American banks aren't as enlightened.
Diverse Business Model
Westpac operates five major divisions that include Westpac Retail & Business Banking, Westpac Institutional Bank, St. George Bank, BT Financial Group (Australia
Financial Highlights
Westpac's cash earnings grew 26% in 2010 on the back of 1% revenue growth, which was subdued due to lower margins and customer fees. The big growth number came from net profits, which were up 84% year-over-year to A$6.3 billion; much of this resulted from a cut in impairment charges on the company's loans to A$1.5 billion from A$3.2 billion a year earlier. By almost every metric, 2010 was a much better year. The only thing that I can see that needs improvement is the cash earnings to shareholder equity, which was up 210 basis points to 16.1% in 2010, but still well below the 20% returns seen between 2001 and 2008. However, this is a small point when you consider that Westpac is only one of 10 banks worldwide with a credit rating of 'AA' or above.
The Bottom Line
Westpac's stock hit an all-time high of A$144.04 in October 2007. At the time, its book value per share was $42.73 and it traded at 3.4 times book value. Today, while it's more profitable, it trades at 1.7 times book - half what it did back then. Even if the stock went on an 80% run to above A$200, the yield would still be 3%. This bank's financial strength is still intact, so it makes perfect sense for investors to own it.
(Discover the issues that complicate these payouts for investors. Check out Dividend Facts You May Not Know.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
Westpac Bank and Other Foreign
|
Company |
Yield |
|
Westpac Bank (NYSE:WBK) |
6.4% |
|
Banco Latinamericano de Comercio Exterior (NYSE:BLX) |
4.8% |
|
Banco |
4.2% |
|
Barclays PLC (NYSE:BCS) |
3.2% |
|
Credit Suisse Group (NYSE:CS) |
2.6% |
Westpac got its start 194 years ago and today is one of the most successful banks anywhere. Operating five divisions that serve 11.8 million customers, it is solidly profitable and suffered little damage from the 2008 financial crisis that hit most American banks. Most intriguing is the fact that its CEO is a woman. That's a rarity in the banking world, especially in a company the size of Westpac. As an organization, Westpac has set a goal to have women occupy 40% of its 4,000 senior management roles by 2014 in order to comply with new Australian stock exchange guidelines that are designed to encourage gender equality in business. Currently, about 33% of these roles are filled by women. Too bad North American banks aren't as enlightened.
Diverse Business Model
Westpac operates five major divisions that include Westpac Retail & Business Banking, Westpac Institutional Bank, St. George Bank, BT Financial Group (
Westpac's cash earnings grew 26% in 2010 on the back of 1% revenue growth, which was subdued due to lower margins and customer fees. The big growth number came from net profits, which were up 84% year-over-year to A$6.3 billion; much of this resulted from a cut in impairment charges on the company's loans to A$1.5 billion from A$3.2 billion a year earlier. By almost every metric, 2010 was a much better year. The only thing that I can see that needs improvement is the cash earnings to shareholder equity, which was up 210 basis points to 16.1% in 2010, but still well below the 20% returns seen between 2001 and 2008. However, this is a small point when you consider that Westpac is only one of 10 banks worldwide with a credit rating of 'AA' or above.
The Bottom Line
Westpac's stock hit an all-time high of A$144.04 in October 2007. At the time, its book value per share was $42.73 and it traded at 3.4 times book value. Today, while it's more profitable, it trades at 1.7 times book - half what it did back then. Even if the stock went on an 80% run to above A$200, the yield would still be 3%. This bank's financial strength is still intact, so it makes perfect sense for investors to own it.
(Discover the issues that complicate these payouts for investors. Check out Dividend Facts You May Not Know.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Will Ashworth
Will Ashworth lives and works in Toronto, Canada. He's worked in and around the financial services industry for much of his adult life. He loves investing and is passionate about helping others learn how to put their money to work.
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