Finding Alpha In Reliable Dividend Banks

Published Wed, 14 Jun 2017 05:46:12 -0400 on Seeking Alpha

Background
Since retiring from a 31 year career in banking at the end of 2011, I have spent my time researching, writing, and speaking about US banks.
One of my keenest interests is understanding why some banks do consistently well and others fail. My first book covered bank failures while my second focused on the nation's highest performing banks.
In my book about great banks I discovered a few critical factors influence long-term success in banking: hands-on expert management, competitive advantage, and an intense focus on flawless execution.
In this post I want to update a chapter in my 2016 book about long-term bank investing.
As background, my book analyzed 312 US banks that were publicly traded between 2004 in 2014. Of these banks only 31 raised dividends annually between 2005 and 2014.
How hard was it for banks to raise dividends during the 2008-09 Great Panic? As I document in my book, two out of three US banks cut or eliminated dividends in 2008 and 2009. Among the 20 biggest banks only Northern Trust (Nasdaq: NTRS) and M&T Bank (NYSE: MTB) avoided dividend cuts during the 10 years ending 2014. However, neither Northern Trust nor M&T raised dividends during the Great Panic.
My book includes a chapter analyzing the 31 banks that boosted dividends annually during the 10 years of study. My research showed these reliable dividend payers:
Produce superior return on equity And more importantly, produce superior risk-adjusted return on... Read more