Tags: NYB | value | dividend | danger

NYB: Value Stock or Dividend in Danger?

By    |   Tuesday, 01 Nov 2011 04:43 PM

New York Community Bancorp (NYB) has been paying its current dividend rate for almost eight years. Now the share price has dropped to the point that the dividend yield is in that danger zone where the market may be indicating a reduction of the dividend is imminent. For investors, the current decision on this bank stock is whether they believe the bank is a value play that can maintain its dividend or not.

New York Community Bancorp is a bank holding company which owns several local and thrift type banks in the New York area as well as in Ohio and Arizona. New York Community Bank has 227 branches and is focused on single and multi-family mortgages. It has achieved its growth through acquisitions, completing a dozen mergers or purchases of banks, thrifts or securities firms since 2000.

Covering dividends

New York Community Bancorp has been paying the current 25 cents quarterly dividend since the second quarter of 2004. The bank has always had a high payout ratio. However, starting in 2007 with the financial crisis, the $1 annual dividend has put the payout ratio near or above 100 percent of net income.

In the first nine months of 2011, NYB reported quarterly net income of 28 cents, 27 cents and 27 cents, respectively. Fourth quarter earnings are forecast to be 28 cents per share. For 2012, the consensus earnings estimate is $1.14 per share, 4 cents higher than in 2011.

At the current share price and the $1 annual dividend, NYB is yielding more than 8 percent. The share value is down 35 percent from its 52-week peak.

The financial sector as a whole has been under pressure, declining by 12 percent over the last 12 months. NYB has underperformed this benchmark by an additional 15 percent.

Recently, Goldman Sachs analysts highlighted New York Community Bancorp as one of four banks which would benefit most from a predicted increase in mortgage-related revenues.

The company next reports on Jan. 26.

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New York Community Bancorp (NYB) has been paying its current dividend rate for almost eight years. Now the share price has dropped to the point that the dividend yield is in that danger zone where the market may be indicating a reduction of the dividend is imminent. For...
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2011-43-01
Tuesday, 01 Nov 2011 04:43 PM
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