5 Historically High-Yielding Bank Stocks Gurus Like

Summary

• M&T Bank
  MTB
  , Dime Community, Simmons First National, National Bankshares and Flushing Financial have high dividend yields and are popular with gurus.

A new year comes with new challenges. On top of the existing uncertainty related to inflation, interest rates and geopolitical turmoil, the recent collapse of SVB
VB
Financial Group’s (SIVBQ, Financial) Silicon Valley Bank and Signature Bank (SBNY, Financial) have caused many investors to seek some stability within their portfolios.

One strategy they can use to hedge their investments against inflation and other headwinds is to look for stocks that pay dividends while prices are down. While there is always a risk of the dividend being cut, historically, dividend-paying companies have been found to be less erratic in choppy market conditions and continue to provide a better overall return compared to stocks that do not distribute dividends to investors.

According to GuruFocus’ Historical High Dividend Yield Screener, a Premium feature, there are a number of financial services companies that have long and consistent histories of paying dividends. In addition, they currently have a dividend yield of over 4% and a dividend payout ratio below 0.5.

As of March 29, banks that qualified for the screener and 13F filings show were held by at least four gurus at the end of the fourth quarter of 2022 included M&T Bank Corp. (MTB, Financial), Dime Community Bancshares Inc. (DCOM, Financial), Simmons First National Corp. (SFNC, Financial), National Bankshares Inc. (NKSH, Financial) and Flushing Financial Corp. (FFIC, Financial).

Investors should be aware that 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.

M&T Bank

Offering a 4.05% dividend yield and a payout ratio of 0.42, M&T Bank (MTB, Financial) is held by 11 gurus. The company has not reduced its dividend in 38 years.

The Buffalo, New York-based bank holding company has a $20.29 billion market cap; its shares were trading around $120.75 on Wednesday with a price-earnings ratio of 10.48, a price-book ratio of 0.88 and a price-sales ratio of 2.43.

The GF Value Line
VALU
suggests the stock is modestly undervalued currently based on its historical ratios, past financial performance and analysts’ future earnings estimates.

At 74 out of 100, the GF Score indicates the company is likely to have average performance going forward. While it received a high rating for GF Value, the profitability, financial strength, growth and momentum ranks were more moderate.

Of the gurus invested in M&T Bank, Barrow, Hanley, Mewhinney & Strauss has the largest stake with 1.47% of its outstanding shares. Paul Tudor Jones (Trades, Portfolio), Baillie Gifford (Trades, Portfolio), Ray Dalio (Trades, Portfolio)’s Bridgewater Associates, Chris Davis (Trades, Portfolio), Bernard Horn (Trades, Portfolio) and several other gurus also own the stock.

Dime Community Bancshares

Yielding 4.09% and with a 0.26 payout ratio, Dime Community (DCOM, Financial) is held by four gurus. For the past 26 years, the company has not cut its dividend.

The bank holding company, which is headquartered in Hauppauge, New York, has a market cap of $890.34 million; its shares were trading around $23.11 on Wednesday with a price-earnings ratio of 6.20, a price-book ratio of 0.85 and a price-sales ratio of 2.11.

According to the GF Value Line, the stock is significantly undervalued currently.

The GF Score of 82 implies the company has good outperformance potential, driven by high ratings for growth, GF Value and momentum and middling marks for profitability. The financial strength rank was low, however.

With 0.61% of its outstanding shares, Jim Simons (Trades, Portfolio)’ Renaissance Technologies has the largest position in Dime Community. Other guru investors are Horn, Jones and Chuck Royce (Trades, Portfolio).

Simmons First National

Sporting a 4.27% dividend yield and a payout ratio of 0.37, Simmons First National (SFNC, Financial) is held by five gurus. The company has not cut its distribution in 35 years.

The Pine Bluff, Arkansas-based bank holding company, which operates under the Simmons Bank
SFNC
banner, has a $2.25 billion market cap; its shares were trading around $17.72 on Wednesday with a price-earnings ratio of 8.55, a price-book ratio of 0.69 and a price-sales ratio of 2.51.

Based on the GF Value Line, the stock appears to be modestly undervalued currently.

The company is likely to have poor performance going forward on the back of a GF Score of 62. While it raked in a solid rating for GF Value, its profitability and momentum ranks were more moderate and growth and financial strength were low.

Hotchkis & Wiley has the largest holding in Simmons First National with 0.36% of its outstanding shares. Ken Fisher (Trades, Portfolio), Simons’ firm, Jones and Steven Cohen (Trades, Portfolio) also have positions in the stock.

National Bankshares

With a dividend yield of 4.48% and a payout ratio of 0.35, four gurus have positions in National Bankshares (NKSH, Financial). The company has not reduced its payment in 28 years.

The community bank holding company headquartered in Blacksburg, Virginia has a market cap of $197.25 million; its shares were trading around $33.49 on Wednesday with a price-earnings ratio of 7.72, a price-book ratio of 1.61 and a price-sales ratio of 3.37.

The GF Value Line suggests the stock is modestly undervalued currently.

The GF Score of 73 means the company is likely to have average performance going forward. Although National Bankshares received a high GF Value rank, the profitability, growth and financial strength ratings were more moderate and momentum was low.

Holding 1.77% of National Bankshares’ outstanding shares, Royce is the largest guru shareholder. Charles Brandes (Trades, Portfolio), Hotchkis & Wiley and Simons’ firm also own the stock.

Flushing Financial

Generating a 5.90% dividend yield and a payout ratio of 0.35, four gurus own Flushing Financial (FFIC, Financial). The company has not slashed its dividend in 22 years.

The Lake Success, New York-based holding company for Flushing Bank has a $438.94 million market cap; its shares were trading around $14.89 on Wednesday with a price-earnings ratio of 5.98, a price-book ratio of 0.65 and a price-sales ratio of 1.82.

According to the GF Value Line, the stock is significantly undervalued currently.

Based on its GF Score of 78, the company is likely to have average performance going forward. While it received high ratings for two of the criteria, the profitability and momentum ranks were more moderate and the financial strength was low.

With 3.15% of outstanding shares, Mario Gabelli (Trades, Portfolio) is the company’s largest guru shareholder. Flushing Financial is also being held by Hotchkis & Wiley, Simons’ firm and Jones.

Additional opportunities

Other banks that met the criteria included Horizon Bancorp (HBNC, Financial), Community Trust Bancorp Inc. (CTBI, Financial) and Camden National Corp. (CAC, Financial).

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.