Investors can expect a few banks to increase their dividends meaningfully, Rochdale Securities analyst Dick Bove said Monday.
Particularly likely to see an increase in dividend yield are banks that have large amounts of treasuries and noninterest income on their balance sheets and lower exposure to real estate and consumer lending.
“What that means is the three bank trusts, which would be Northern Trust, State Street and Bank of New York, probably will get an OK to increase their dividends meaningfully,” he said on “Fast Money.”
Bove also said Goldman Sachs and Morgan Stanley “will probably” see a dividend increases, as well as share repurchases, while companies like Bank of America, JPMorgan and Citigroup will get only “moderate increases.”
Sun Trust, for instance, with its exposure to real estate and consumer loans might not fare as well as Comerica, which holds more commercial loans, he said.
The Federal Reserve is scheduled to release the results of its stress tests Thursday, and analysts are mostly expecting them to show positive results.
“If you take a look at the liquidity in the banking balance sheets, if you look at the capital that they have as a percentage of assets, if you look at their profits relative to the past two, three, four years, you’ll see that in every case the banks have come back very, very strongly,” Bove said. “And therefore, they should be able to get a significant increase in dividends.”
Bove took a bullish outlook for the next few years.
“I think that the key is, however, that these dividends are now going to go up every year, year after year, for the next four, five years until we run into the next down cycle in which they’ll get killed again,” he said.
Bove also weighed in on three big banks:
Bank of America: “I’m still a big believer it’s going to get to $13 by the end of the year, so yeah, I’d buy it.”
JPMorgan: “Slower growth situation, but it should move up maybe 5-10 percent this year. I think that given an increased yield, some stock buyback, a 10 percent, maybe, increase in price, I’d buy it.”
Citigroup: “Citi I think is going to be the most active of all the bank stocks — of the big bank stocks — in terms of its growth this year. I think you’re going to see Citi grow at least 25 percent this year.”
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Trader disclosure: On March 12, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: P. Najarian is long AAPL; P. Najarian is long C; P. Najarian is long WFC calls; P. Najarian is long INTC; P. Najarian is long YHOO; P. Najarian is long JOYG calls; P. Najarian is long COP; P. Najarian is long PEP; P. Najarian is long HPQ; Scaramucci is long IBM; Scaramucci is long PFE; Scaramucci is long GS; Scaramucci is long JPM; Scaramucci is long PEP; Scaramucci is long DELL; Scaramucci is long HPQ; Kelly is long SPY; Kelly is long IWM; Kelly is long KRE; Kelly is long TLT; Kelly is long GLD; Kelly is long SLV; Kelly is long US dollar; Kelly is long Mexican peso; Kelly is short Yen; Kelly is short Aussie $;
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