Regional Bank Stocks Present Dividend Opportunities Amidst Market Struggles

Regional bank stocks have faced a challenging year, but investors seeking attractive dividend yields may find promising options, according to a report from Piper Sandler. Mark Fitzgibbon, managing director at the firm, highlighted that the recent decline in bank stock prices has led to the emergence of several regional and community banks with appealing dividend yields. However, he cautioned that a high yield alone is not a reliable indicator of a sound investment, as it may reflect a declining stock price. To identify viable dividend-paying banks, Fitzgibbon's team conducted a thorough screening of major exchanges, focusing on banks with current dividend yields exceeding 5%. They excluded banks with a dividend payout ratio above 85% and those with tangible common equity ratios below 7%, as these factors could signal potential regulatory pressures to cut dividends. The analysis ultimately selected banks rated as overweight by Piper Sandler. Among the highlighted banks, Brookline Bancorp stands out, despite a 15% decline in 2024, offering a dividend yield of 5.8%. Fitzgibbon described Brookline as a high-quality commercial bank with improving profitability metrics. Another notable mention is a bank with a 5.7% dividend yield, which has seen a nearly 9% drop this year but maintains a robust capital position and a dividend payout ratio near 60%, suggesting a strong foundation for future earnings growth. Overall, while regional banks face headwinds in a higher interest rate environment, the potential for solid dividend returns remains, provided investors conduct careful due diligence.