TD - Don't Waste Your Time Waiting for New York Community Bancorp's Turnaround. These Stocks Are Better Buys.
2024-05-07 04:07:00 ET
To simplify the story, New York Community Bancorp (NYSE: NYCB) got too big, too fast just as interest rate increases made operating a bank more complicated. It ended up needing a huge cash infusion, and it massively reduced its dividend to just a penny per share per quarter, all in support of a broader turnaround effort. Now that it offers little in the way of dividend income and is facing a multi-year turnaround, investors would be better served looking at U.S. giants like Bank of America (NYSE: BAC) and Citigroup (NYSE: C) , or high-yield Canadian giants Toronto-Dominion Bank (NYSE: TD) and Bank of Nova Scotia (NYSE: BNS) , which are both in the midst their own turnarounds. Here's why.
New York Community Bancorp is a regional bank that is trying to increase its scale to compete with the banking industry's largest players. One of the problems that it faces is that increasing in scale means increased regulatory scrutiny. The bank just wasn't ready. Bank of America and Citigroup are already used to the highest level of regulatory oversight.
Bank of America is one of the largest banks in the United States, with revenue of $25.8 billion in the first quarter of 2024 alone. Despite its size, it continues to grow across all four of its business divisions -- consumer banking, global banking, global wealth and investment management, and global markets. And it has a Tier 1 Capital Ratio , a measure of how well a bank is prepared for adversity, of 11.8%, which is 184 basis points above the regulatory requirement (higher percentages are better). It has increased its dividend annually for a decade, and the dividend yield is currently 2.5% or so.
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Don't Waste Your Time Waiting for New York Community Bancorp's Turnaround. These Stocks Are Better Buys.