Tuesday, July 19, 2011

M&T Bank Has A Solid Dividend

M&T Bank (MTB) is a regional bank that services customers in the MidAtlantic region of the county. The bank has been in operation for over 150 years having quietly grown its assets and influence over time. M&T Bank is noted for its long time history of profitability and great history of managing risk. The bank was a major beneficiary during the financial crisis using the economic weakness to acquire more depositors. Unlike many of its big banking brethren, M&T did not require a government bailout to stay afloat. M&T has expanded its deposit base in recent years by acquiring Provident Bank, Wilmington Bank & Trust, and Bradford Bank. These acquisitions should only increase the profitability for a bank that has produced quarter after quarter of profitably for nearly 40 years. The company is a fixture on the S&P 500’s list and is one of only two banks that did not have to lower its dividend back in 2008.

The bank’s stock currently trades in line with other bank competitors. M&T trades at 13.6 times this year’s earnings and 11 times forward earnings. M&T trades at 1.3 times book value, 3 times sales, and 5.6 times cash flow. The company has been able to solidly grow its revenue in the single digits and now holds over $70 billion dollars of client assets. The company continues to look for safe ways to grow its banking operations.

M&T Bank is a great dividend play because it is one of the few stocks that did not lower its dividend during the financial crisis. The company has been able to consistently maintain its dividend and has a fantastic payout at a time when most of the big banks have very low yields. M&T Bank is currently paying investors $2.80 per share which is a very solid 3.3% yield. The $2.80 dividend represents a 44% payout which is reasonable. The dividend is not at risk since the company has been a wise steward of investor capital for years.

The stock even has the endorsement of Warren Buffett himself having purchased shares last years. Investors interested in owning a solid financial institution with a good dividend should give M&T Bank a look.

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