Get Paid While You Wait

One way to take advantage of the bank "trade of the decade" is to look for stocks that pay decent dividends. This trade is going to take years to reach its best conclusion, so you might as well get paid while you wait for the profit improvements and M&A wave to work their magic.

You have to be somewhat conservative about buying dividend-paying banks, as the highest yielders often use cut dividends to preserve capital. In the last year or so several banks, such as First Niagara Financial (FNFG) and Hudson City Bancorp (HCBK), slashed payouts to protect or restructure the balance sheet. I want to look for banks that have many of the characteristics of a perfect bank, especially a high tangible-equity-to-asset ratio. By focusing on banks with excess capital and a good, but not spectacular, dividend yield, we can assemble a portfolio of bank stocks that throws off cash and has enormous upside potential over time....574 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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