2 Regional Banks Hike Dividends and Offer 8%-Plus One-Year Asset Appreciation
By: Ned Piplovic,
A company that has been paying a rising dividend for 52 years leads a pair of regional banking service providers that also have delivered strong asset appreciation of 8% and 67% since June 2016.
While their current dividend yields of 2.2% lag a little behind the financial sector’s average yield of 3.21%, these two banks more than offset that gap by providing stable dividend income growth and long-term asset appreciation. With ex-dividend dates approaching quickly on June 7 and June 8, 2017, investors interested in stable dividend income should waste no time checking out these equities as potential additions to their portfolio.
Farmers & Merchants Bancorp (OTC:FMCB)
Farmers & Merchants Bancorp operates as the bank holding company for Farmers & Merchants Bank of Central California. The bank provides a range of standard deposits, credit and loans products, as well as investment products, such as mutual funds and annuities. The company serves customers through a network of 26 full-service branches and additional stand-alone automated teller machine locations. Founded in Lodi, California, in 1916, Farmers & Merchants Bancorp remains headquartered in the city.
The semiannual dividend rose 3.1%, or $0.20, from $6.55 to $6.75. A little bit of bad news is that the annualized dividend payout of $13.50 per share yields only 2.2%, since the share price currently exceeds $600. However, the company has boosted its dividend for the past 52 years. Over the past 20 years, the annual dividend amount grew at an average rate of 7.6% every year.
The share price lost 10% in June 2016 but recovered quickly and has been trading since July 2016 mostly in the $575 to $625 range. At the market’s close on June 1, 2017, the $613 share price is 2.2% above last June’s level.
The share price’s 50-day moving average (MA) had been dropping since the beginning of the year, but reversed course in late April and has been rising since then. The 50-day MA already closed half the gap to the 200-day MA. If the trend continues, it could cross the 200-day MA in a bullish manner in the next few weeks. That buy signal and the long-term rising dividends could be reasons enough to consider taking a long position in FMCB.
Stock Yards Bancorp, Inc. (NASDAQ:SYBT)
Stock Yards Bancorp, Inc. operates as the bank holding company for Stock Yards Bank & Trust Company banking services through 37 locations in Louisville, Indianapolis and Cincinnati. In addition to standard banking products such as demand deposits, savings deposits, certificates of deposit, money market deposits, real estate mortgages and consumer loans, the bank also offers investment management, retirement planning, trust and estate administration and financial planning services. Additionally, the company offers securities brokerage services through an arrangement with a third-party broker-dealer. Founded in 1904, The Stock Yards Bancorp, Inc. is headquartered in Louisville, Kentucky.
The current quarterly dividend rose 5.3% from $0.19 to $0.20, which equals a $0.80 annual payout and a 2.2% yield. The company’s dividend hike history is much better than what the current streak of seven consecutive annual dividend hikes indicates. Over the past 20 years, Stock Yards Bancorp failed to raise its annual dividend amount only once when it paid the same dividend in 2009 and 2010, following the financial crisis. Since 1998, the company raised its annual distribution by an average rate of 12.5% every year for the past 20 years.
While the company’s share price is currently trading 24% below its 52-week high in January 2017, the price is still 25.7% higher than it was in June 2016 and 136% higher than it was five years ago.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.