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High-yield stocks pay out dividends that are significantly more than market average dividends. For example, the S&P 500’s current yield is only ~1.2%.

High-yield stocks can be very helpful to shore up income after retirement. A $120,000 investment in stocks with an average dividend yield of 5% creates an average of $500 a month in dividends.

Wesbanco Inc. (WSBC) is part of our ‘High Dividend 50’ series, where we cover the 50 highest-yielding stocks in the Sure Analysis Research Database.

Next on our list of high-dividend stocks to review is Wesbanco, Inc.

Business Overview

WesBanco is a diversified, community-focused financial services company headquartered in Wheeling, West Virginia. Established in 1870, WesBanco has grown to operate over 200 branches and financial centers across West Virginia, Ohio, Western Pennsylvania, Kentucky, Maryland, and Southern Indiana.

The company offers a comprehensive range of banking and financial services, including commercial banking, personal banking, mortgage banking, and wealth management services.

The commercial banking division of WesBanco provides a broad spectrum of services designed to meet the needs of small to medium-sized businesses. These services include business loans, commercial real estate financing, treasury management, and merchant services.

WesBanco’s personal banking offerings cover traditional deposit products such as checking and savings accounts, certificates of deposit, individual retirement accounts, personal loans, credit cards, and home equity lines of credit.

The bank’s mortgage banking services help customers with home purchases, refinancing, and construction loans, providing tailored solutions to fit various financial situations.

WesBanco’s wealth management segment encompasses trust and estate services, investment management, and private banking. The company’s experienced advisors work closely with clients to develop personalized strategies for wealth preservation, growth, and transfer.

Additionally, WesBanco’s insurance services provide various personal and commercial insurance products, further enhancing its comprehensive financial solutions portfolio.

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Source: Investor Presentations

For the first quarter of fiscal year 2024, WesBanco announced net income available to common shareholders of $33.2 million, translating to diluted earnings per share of $0.56. This was a decrease from the previous year’s first quarter figures, which were $39.8 million and $0.67 per diluted share, respectively.

Adjusted for after-tax restructuring and merger-related expenses, the net income for Q1 2024 remains $33.2 million, or $0.56 per diluted share, compared to $42.3 million, or $0.71 per diluted share in Q1 2023.

Key financial and operational metrics showed positive trends during the first quarter of 2024. Deposits grew to $13.5 billion, marking a 4.8% year-over-year increase and a 2.5% rise from the previous quarter. Average loans to average deposits stood at 88.7%, supporting the capacity for continued loan growth. Total loan growth was robust at 9.0% year-over-year and 2.0% quarter-over-quarter.

Non-interest income also saw an increase of 10.8% year-over-year, bolstered by new commercial loan swaps and wealth management fees. WesBanco’s management effectively controlled non-interest expenses through strategic staffing and marketing cost adjustments.

Growth Prospects

WesBanco, Inc. demonstrates promising growth prospects through its strategic expansion and diversified service offerings.

With total loans growing by 9.0% year-over-year, driven primarily by a 9.3% increase in commercial loans, WesBanco is well-positioned to capitalize on the robust demand for commercial real estate and business financing.

The record $1.2 billion commercial pipeline as of March 31, 2024, underscores the potential for sustained loan growth.

Source: Investor Presentations

In addition to loan growth, WesBanco’s ability to attract and retain deposits is a key driver of its growth prospects. Total deposits increased by 4.8% year-over-year to $13.5 billion, reflecting the success of WesBanco’s deposit-gathering initiatives.

The stable composition of deposits, with demand deposits representing 55% of the total, ensures a solid foundation for funding future loan growth.

Moreover, the increase in non-interest income by 10.8% year-over-year, supported by new revenue streams such as commercial loan swaps and wealth management fees, highlights the company’s effective diversification strategy.

WesBanco’s commitment to maintaining high credit quality and managing operational expenses enhances its growth outlook. Despite a slight increase in criticized and classified loans, key credit quality metrics remain strong, with low levels of non-performing assets and net charge-offs.

Effective management of staffing levels and marketing costs has led to a decline in non-interest expenses, contributing to improved operational efficiency.

Competitive Advantages & Recession Performance

WesBanco benefits from several competitive advantages that enhance its market position and resilience. One key strength is its diversified portfolio of financial services, which includes commercial and personal banking, mortgage banking, and wealth management.

Additionally, the company’s strong regional presence across multiple states, with over 200 branches, provides a stable and expansive customer base, fostering both growth and stability.

Another significant competitive advantage for WesBanco is its commitment to maintaining high credit quality and operational efficiency.

Key metrics such as non-performing assets and total past due loans have stayed low and favorable compared to peer banks. The allowance for credit losses at the end of the quarter was 1.09% of total loans, excluding fair market value adjustments on previously acquired loans.

WesBanco’s performance during economic downturns further underscores its resilience. Historically, the company has demonstrated an ability to maintain strong credit quality metrics and stable earnings even during recessions.

Dividend Analysis

Wesbanco, Inc.’s current annual dividend is $1.44 per share. At $27.11, it has a high yield of 5.31%.

Given Wesbanco, Inc.’s outlook for 2024, EPS is expected to be $2.20. As a result, the company is expected to pay out roughly 65% of its EPS to shareholders in dividends.

In the meantime, the dividend appears sustainable, and we estimate the company will grow it at a 2% rate going forward.

The 5.31% dividend yield is desirable for investors focusing primarily on income.

Final Thoughts

The share price of WSBC has increased by 21% in the last year, underperforming the S&P 500 Index’s 25% gain.

WSBC can still offer 5.8% annual total returns from 5.0% EPS growth and the 5.31% yield, partly offset by P/E multiple contractions.

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