Earlier this week, M&T Bank Corporation MTB announced a quarterly cash dividend of 75 cents per share on its common stock. This represents a 7% increase for the first time since its initiation of 70 cents quarterly dividend in Sep 2007.
Does this dividend hike make the stock attractive?
Considering an annualized dividend of $3, the annual yield comes to around 1.8%. While this yield doesn’t look too attractive, it enhances the potential returns from the stock given its underlying strength.
Here are the key factors that spell the stock’s Growth prospects:
Improving Net Interest Income: The company’s net interest income has grown at a CAGR of nearly 7.7% over the last six years.
Earnings Strength: In the past 3–5 years, MTB has witnessed earnings per share (EPS) growth of 11.4% compared to 9.9% for the Industry. Also, the company’s EPS is projected to grow by 8.19% in 2017.
Low Leverage: The debt-to-equity ratio of MTB is 0.62 compared to the industry average of 0.86, indicating a favorable capital structure.
Growing Cash Flow: The company has seen historical cash flow growth of 5.5% compared to 5.45% for the industry. The current cash flow growth looks much impressive when compared with the industry. The company’s current cash flow growth rate is 24.4% versus the industry’s negative 1.7%.
Impressive Price Performance: Shares of M&T Bank have jumped 18.1% in the last three months, outperforming the 12.1% gain for the Zacks categorized Major Regional Banks industry. Currently, this stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Stocks to Consider
Some other stocks worth considering in the same industry include Bank of America, Fifth Third Bancorp and U.S. Bancorp. All these stocks carry the same rank as M&T Bank.
Bank of America BAC witnessed an upward earnings estimate revision of 6% for 2017, over the past 60 days. Also, its share price has increased 99.5% in the last one year.
Fifth Third Bancorp FITB also recorded an upward earnings estimate revision of 4% for 2017, over the same time frame. Its share price is up 79.54% over the last one year.
U.S. Bancorp USB earnings estimates have been revised upward by nearly 2.4%, over the past two months. Its share price rallied 41.54% in the last one year.
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U.S. Bancorp (USB): Free Stock Analysis Report
M&T Bank Corporation (MTB): Free Stock Analysis Report
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Bank of America Corporation (BAC): Free Stock Analysis Report
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