Two dividend paying bank stocks

Two banks that are huge in size have a consistent record of paying dividends. Bank of America and Citigroup are the largest banks. They have market capitalizations of $ 167B and $ 128B. Both these banks trade between 10 and 12 times earnings per share. They have to contend with three issues – bad loans and write-offs arising out of the subprime crisis, liquidity crisis that erodes income and the stock market crisis that erodes the value of their investment. The Federal Reserve has tried to ease the liquidity crisis. The President is seeking Congress to approve a stimulus package that could kick start the economy again. Q1 results of Citigroup were encouraging as the write-offs were below what the market expectations. BOA results were disappointing as the earnings came in much lower that the market expectations. However both these banks may turnaround and this could be a good time to buy the stocks of these banks for long term capital appreciation as well as regular dividends. Both have a dividend reinvestment program too. At its current prices on April 21,08, Citi offers yield of 5.3% and BAC offers yield of 6.8%.

Always consult your investment advisor before making any investments.Even if you think you understand investments, this is a sound and time honoured practice that can save your money.