Dividends can be a way for investors to more effectively safeguard returns. And many applauded as dozens of firms, including Time Warner and Pitney Bowes, raised their dividends in the last few days. Are financial firms next in line?
Matt McCormick, banking analyst and portfolio manager at Bahl & Gaynor Investment Counsel, shared his views.
“If you’re going to see dividend increases, I would not count on it to come from the financial sector anytime soon,” McCormick told CNBC.
McCormick said there are still political and regulatory issues that would cause CEO and CFOs to “husband their cash” in anticipation of taxes, programs and other rules.
“It would behoove them to keep their powder dry and their capital ratios higher, in anticipation of further costs down the road,” he said.
So where should dividend-hungry investors look? McCormick suggested the following ideas—including an exception to his rule.
“A name that we own is Scotiabank , a Canadian bank with no exposure to U.S. It has a built-in commodity play,” he said.
“You can also look at names that people use everyday, like McDonald’s .”
- Watch McCormick's Previous Appearance on CNBC (Jan. 29. 2010)
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Bahl & Gaynor Investment Counsel owns shares of BNS and MCD.