Leave The Lobby Before This Bank Robbery Goes Down
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No, it’s not the bank that’s going to be robbed.
The tellers’ drawers won’t be cleaned out.
But the bank’s investors are about to be picked clean.
This bank stock pays a dividend yield of 4.29%. But it takes 89% of all the bank’s revenue to fund it.
This is not a recipe for dividend growth. It’s a recipe for dividend disaster.
This bank is headquartered just 16 miles from Disneyland and its financial statement is scary enough to live in the Haunted Mansion.
What’s the problem? Why is the Banc of California (BANC), with its $4 billion in assets and 80+ locations, in such a precarious position?
Why Dividend Investors Should Avoid This Risky Stock
The bank has issued $375.61 million of debt over the past three years and asset growth is faster than revenue growth.
How long do you think a company that’s basically losing money can go on paying dividends?
Over the past year, the share price has been tanking, down more than 20% in an up market.
The average bank in America gets a return on its sales of 15.3%. At Banc of California, the number is -1.2%.
Could things turnaround? Is the bank about to trade in its dismal performance for actual profits?
Believers are hard to find.
When we took a look at the Thomson/Reuters five year estimate for the bank’s expected annual growth rate, we weren’t surprised to see -6.0%.
BANC’s average growth rate over the last five years has been 12.5%.
So if you own the stock, you already know it’s time to sell.
And if you’re looking for a bank stock that’s going to pay you a nice dividend, here are three of our favorites.
Each one has a payout ratio around or below 60%.
Bank of Hawaii Corp. (BOH)
Community Bank System Inc. (CBU)
Westamerica Bancorp (WABC)
The yields are reasonable, below 4%.
And unlike Banc of California shareholders, you’re not going to be held up when the getaway car with your dividends takes off.
Category: Dividend Bust
