Is a return to fat dividends becoming a distant dream for bank stock investors? Bank stocks historically appealed to investors because of their high dividend yields and stability as opposed to technology stocks, for example. Then the financial crisis hit and those banks that took government bailout assistance were forced to slash their dividends to minimal, if any, payouts. Most banks have yet to return to their historical payout ratios because they have either not repaid federal bailout funds, they are waiting for more clarity on the economic recovery and future capital standards, or regulators have yet to sign off on a dividend hike.
And while there is a growing sense that regulators will weigh in on capital standards by early next year, some observers are doubtful that the high dividend yields of yore will ever come back, especially as companies (both within and outside of the financial sector) re-think how they return capital to shareholders with many turning to buybacks instead.
Source: TheStreet.com
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