Tomorrow's Dividend Kings

No one remembers the financial crisis and market meltdown of 2008 and 2009 better than dividend investors. They suffered the double-hit of plunging stock prices along with big dividend cuts from many of their favorite stocks. But in the latest sign that the stock market has put its history behind it, the sector that the crisis arguably hit the hardest is about to get their stocks back on the dividend bandwagon. But will investors welcome those companies back to the dividend-paying fold with open arms? Or will memories of disappearing income and ugly brokerage statements keep investors skeptical about their futures?

Obviously, the decision each bank makes will depend on its particular circumstances, including capital requirements, loan loss provisions, and other liquidity needs. But if the banks start with dividends equal to a modest 20% of estimated 2011 earnings, as analysts from RBC Capital suggest could be a reasonable starting point, you could see some huge increases from current levels.

Source: Motley Fool

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