Please ensure Javascript is enabled for purposes of website accessibility

F.N.B. Corporation (FNB) – Wall Street’s Best Digest Daily Alert – 8/6/21

This small bank beat analysts’ EPS estimates by $0.03 last quarter, earning $0.31 per share. The bank has a current annual dividend yield of 4.15%, paid quarterly.

This small bank beat analysts’ EPS estimates by $0.03 last quarter, earning $0.31 per share. The bank has a current annual dividend yield of 4.15%, paid quarterly.

F.N.B. Corporation (FNB)
From Contrarian Outlook

Lately, I’ve been pointing readers toward the financial sector because of its explosive dividend growth. Big banks and regional players alike have been pushing the pedal down hard of late—40% raises, 60% hikes, even overnight doublers!

Current yields, in a few corners of the sector, aren’t anything to sneeze at either. A group of regional banks I’m targeting yields an average of 4.0%—the kind of income you’d expect from a real estate investment trust (REIT) or telco, not a local bank with a few dozen branches.

However, unlike REITs and telcos, these smaller banks are loaded with gunpowder right now. That’s because interest rates appear poised to bottom out, and a return to even a 2% 10-year yield would effectively stuff their pockets with cash—sending prices into orbit and fueling further rounds of super-sized dividend hikes.

Barring Another Downturn, We’ve Found “The Bottom”

Let’s see what these under-the-radar banks have to offer:

We get above the 4% yield mark with FNB Corp. (FNB), the parent of First National Bank. The Pittsburgh-based financial services company boasts more than $38 billion in assets across 340 banking offices in seven states and the District of Columbia.

Not to be left out, FNB is on the M&A warpath itself, announcing in mid-July the acquisition of Baltimore-based Howard Bancorp, which will roughly double its Baltimore deposits as a result.

Dividend growth is nonexistent here; the payout hasn’t budged in years, and while analysts are forecasting a recovery from 2020’s difficulties, there’s not enough in that growth to suggest a higher payout is nigh. Still, core loan growth is re-accelerating, so this could be a GARP (growth at a reasonable price) opportunity, with shares trading at 10 times estimates.

Brett Owens, Contrarian Outlook, BNK Invest Inc., 500 North Broadway, Suite 265, Jericho, NY 11753 USA, 516-620-4294, September 30, 2021