Bank On Banks - Forbes Dividend Investor

John Dobosz is Editor, Forbes Premium Income Report & Forbes Dividend Investor

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Banks benefit from rising long-term interest rates and from a recovering U.S. economy that will spur banks to write more loans while earning a higher spread between the rates at which they borrow and where they lend.

At the risk of going too big into bank stocks, it’s hard to ignore the value credentials of Bridgehampton, N.Y.-based Bridge Bancorp (BDGE).

Since 1911, it has been the holding company for Bridgehampton National Bank on Long Island, and it is a major presence in Nassau and Suffolk counties of New York. Revenue over the past year totaled $176.12 million, growing 10.6% in the most recent quarter.

Along with growth, the stock sports substantial discounts to five-year average valuations across the board, including more than 40% below average multiples of sales and book value, and more than 50% lower than its average P/E ratio since 2015. 

Dividends have been paid since 2000, and at an annual rate of $0.96 per share, they are amply covered by $2.00 in free cash flow per share over the past 12 months. In addition, insiders in recent months have been buyers of the stock.

In addition, we recently added Birmingham, Ala.-based Regions Financial (RF) to our model portfolio. It is one of the largest full-service providers of consumer and commercial banking, wealth management, and mortgage products and services in the U.S, with 1,427 banking offices, and approximately 2,000 ATMs across the South, Midwest, and Texas. 

Regions trades at substantial discounts to four out of the five historical valuations we consider when evaluating stocks. There is an ex-dividend date on December 3 for a payout of $0.155 per share. 

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