Bove Likes BofA (BAC) (BK) (PNC) (COF) (STT) (STI) (NTRS) (SNV) (FBC) in Banking Sector

What's up with Rochdale Securities analyst Dick Bove?

Approximately a month after recommending investors sell the banking sector he had turned around and recommended a basket of banks to buy, including Bank of America (NYSE:BAC), Bank of New York Mellon (NYSE:BK), Flagstar Bancorp (NYSE:FBC), PNC Financial (NYSE:PNC), Capital One Financial (NYSE:COF), State Street(NYSE:STT), SunTrust(NYSE:STI), Northern Trust (NYSE:NTRS) and Synovus (NYSE:SNV).

Bove's thinking in his turnaround for some banks in the sector is a number of banks are selling below their franchise and liquidation values.

"At this moment liquidity and values are more compelling than the next disaster," Bove wrote in a note to clients. The banks listed above are those identified by Bove as such.

Bove's operating definition of cash liquidation value is cash holdings (cash plus net Federal Reserve funds and repurchase agreements) in excess of tangible common equity.

Still, Bove confirms the issues banks face are still in place, and in that regard nothing has changed. They've apparently fallen quicker than Bove had anticipated.

Either that, or someone got hold of Bove and told him not to be so negative on the sector.

Dividend Yields for (JNS) (STT) (AMP) (AXP) (MCO)

Indicated dividend yields for Standard & Poor's 500 Index companies Janus Capital Group Inc (JNS), State Street Corp (STT), Ameriprise Financial Inc (AMP), American Express (AXP) and Moody's Corp (MCO).

These dividend data indicate dividend yields of companies in the Standard & Poor's 500 Index as of Saturday, April 30. The yield is determined by taking the latest declared dividend, annualized and divided by the price of the stock. Payout ratios are calculated based on latest quarterly dividend paid divided by earnings.

Janus Capital Group Inc (JNS) has a dividend yield of 1.64 percent on a declared dividend of $0.05. The payout ratio is 24.5 percent.

State Street Corp (JPM) has a dividend yield of 1.55 percent on a declared dividend of $0.25. The payout ratio is 19.0 percent.

Ameriprise Financial Inc (AMP) has a dividend yield of 1.48 percent on a declared dividend of $0.23. The payout ratio is 19.1 percent.

American Express (AXP) has a dividend yield of 1.47 percent on a declared dividend of $0.18. The payout ratio is 18.2 percent.

Moody's Corp (MCO) has a dividend yield of 1.43 percent on a declared dividend of $0.14. The payout ratio is 20.6 percent.

Choose Mosaic (MOS), Las Vegas Sands (LVS), State Street (STT), Cummins (CMI), Alcoa (AA), Cameco (CCJ) if Unrest Wanes

If the current unrest in the Middle East begins to wane, Vadim Zlotnikov, a strategist at BernsteinResearch, says he would choose stocks like Mosaic (MOS), Las Vegas Sands (LVS), State Street (STT), Cummins (CMI), Alcoa (AA) and Cameco (CCJ).

Assuming unrest continues, he would choose plays such as Chevron (CVX) and Conoco (COP), Bristol Myers (BMY), Sony (SNE) and DirecTV (DTV).

Big increases in the VIX, also known as the fear index, tend to weigh especially heavily on companies whose earnings prospects are tied closely to economic growth. These so-called procyclical stocks won't look like a good bet if the unrest in Libya intensifies and the New York price of oil soars to, say, $120 a barrel.

But Zlotnikov says he doesn't expect that to happen – which should be good news for the global economy and companies whose profits are strongly tied to global growth.

"While potential for spread of unrest to other major oil producing countries is clearly possible, this is not our base case as governments of oil-producing countries will seek to mitigate unrest through wage and other concessions," he writes. "Under the scenario of sustainable $100 oil during 2011, the adverse economic impact should be contained and a 'normal' decline in VIX should ensue during the next couple of weeks."




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Bearish Outlook on BAC, C, KEY, PNC, STT

Outlook for BAC, C, KEY, STT, PNC

The selection of the five banking firms below is based on the following supportive data as well as both their short and longer-term price and earnings performance. I expect these companies to have improved earnings, but I do not have the confidence, price-wise to take new bullish positions.

For guidance, I normally compare most all securities with Apple (AAPL). When the securities get close (in my three disciplines) I buy them confidently. Those disciplines are my weighted fundamental, technical and consensus analysis. I also have just two categories of investments. These are a mix of “Bellwether” and “High Profile" companies and are rated and compared below with brief comments.

The market is doing what it loves to do

Lately, that means it is both fundamentally and technically very fickle. What many investors often forget is that what appears to be a fact is, in reality, very creative fiction. The fictional stories being told by Wall Street and the media are so compelling that the average investor takes the hook, line and sinker most every time. That’s a fact and, for me, it is a very sad commentary.

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JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC), US Bancorp [NYSE:USB) Among Banks Likely to Raise Dividends

Among U.S. banks, RBC Capital says JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), US Bancorp (NYSE:USB), Bank of New York Mellon (NYSE:BK), Capital One Financial (NYSE:COF), PNC Financial Services Group (NYSE:PNC), State Street (NYSE:STT) are among those with the highest probability to raise their dividends.

Much of this is based upon the requirement of the U.S. government which said only banks that were well-capitalized would be allowed to boost their dividends, something RBC Capital Markets analyst Gerard Cassidy believes the banks listed above qualify for.

Not only that, Cassidy thinks they banks could raise dividends quicker than investors think they will.

So far there hasn't been much activity in that regard, but if one or two raise dividends, there's no doubt those who qualify will respond quickly with dividend increased of their own.

BofA (NYSE:BAC), Citi (NYSE:C), Wells Fargo (NYSE:WFC), JPMorgan (NYSE:JPM) Among Barclays (NYSE:BCS) Top Bank Picks

Top picks in a number of sectors have been unsurprisingly pouring out from everywhere, and one Barclays (NYSE:BCS) released their list of top picks in the banking industry, led by BofA (NYSE:BAC), Citi (NYSE:C), Wells Fargo (NYSE:WFC) and JPMorgan (NYSE:JPM).

Barclays noted their picks were based mostly on those banks that are expected redeploy capital in the first part of 2011.

Also chosen as top pick banks were State Street (NYSE:STT), PNC Financial (NYSE:PNC), US Bancorp (NYSE:USB), TCF Financial (NYSE:TCB), Bank of New York Mellon (NYSE:BK), First Interstate Bancsystem (Nasdaq:FIBK) and City National (NYSE:CYN).


Bank ratings and price targets:


BofA - Equalweight with $19 price target - closed at $14.19

Citi - Overweight with $6 target - closed at $4.90

Wells Fargo - Overweight with $36 target - closed at $31.58

JPMorgan - Overweight with $60 target - closed at $43.58

State Street - Overweight with $57 target - closed at $47.62

PNC Financial - Equalweight with $75 target - closed at $61.46

US Bancorp - Overweight with $31 target - closed at $26.94

TCF Financial - Overweight with $22 target - closed at $14.84

Bank of NY Mellon - Overweight with $38 target - closed at $30.81

First Interstate Bancsystem - Overweight with $19 target

City National (NYSE: CYN) - Overweight with $65 target - closed at $15.57

Top Ten Calls Recommended by Goldman Sachs (NYSE:GS)

Goldman Sachs (NYSE:GS) released a list of their top ten calls in the financial sector, targeting those lagging behind the market in the midst of what they perceive as improving fundamentals.

They see the overall sector rising.

The 10 companies the options strategists at Goldman recommend are these: IntercontinentalExchange, Inc. (NYSE:ICE), Allstate Corporation (NYSE:ALL), Travelers Companies, Inc. (NYSE:TRV), Franklin Resources (NYSE:BEN), The Chubb Corporation (NYSE:CB), Moody's Corp. (NYSE:MCO), Progressive Corp. (NYSE:PGR), State Street Corp. (NYSE:STT), NYSE Euronext, Inc. (NYSE:NYX) and T. Rowe Price (Nasdaq:TROW).

IntercontinentalExchange, Inc. was trading at $117.87, up $1.49, or 1.28 percent, as of 12:14 PM EST. Allstate was at $30.98, up $ 0.03, or 0.10 percent. Travelers was at $55.42, up $0.08, or 0.14 percent. Franklin Resources was trading at $117.37, up $0.93, or 0.80 percent. Chubb was at $59.53, up $0.04, or 0.07 percent. Moody's was at $27.40, up $0.07, or 0.26 percent. Progressive was up to $20.62, gaining $0.18, or 0.88 percent. State Street moved up to $45.60, rising by $0.40, or 0.88 percent. NYSE Euronext was up to $29.62, gaining $0.27, or 0.92 percent. T.Rowe Price was trading at $63.31, up $0.53, or 0.84 percent.

All 10 companies were positive as of this writing.

State Street (NYSE:STT) Enhanced by Securities Sale

State Street (NYSE:STT) should benefit in several areas from its securities sale, according to Barclays (NYSE:BCS), although margins will remain under pressure.

Barclays said, "STT believes its securities sale will: a) increase its balance sheet flexibility in deploying its capital (presumably at higher rates); b) enhance its Basel capital (BBB and below rated securities receive punitive risk weightings); and c) reduce its exposure to certain asset classes (AAA/AA concentration goes from 82% to 88%).

"We are maintaining our 2010 operating EPS estimate of $3.40 ($0.86 operating in 4Q; $0.15 reported). We are lowering our 2011 EPS estimate by $0.20 (5%) to $3.75 to reflect our expectations of lower net interest margin, only partially mitigated by its expense reduction program."

Barclays maintains an "Overweight" on State Street, which closed Friday at $45.93, up $0.19, or 0.42 percent. They have a price target on them of $57.

Wells Fargo (NYSE:WFC), US Bancorp (NYSE:USB), PNC (NYSE:PNC) and JPMorgan (NYSE:JPM) Could Raise Dividends in First Quarter

Commenting on the growing interest in banks starting to return capital to shareholders via dividends again, Goldman Sachs (NYSE:GS) said the banks in the strongest position and allowed to do that the soonest are Wells Fargo (NYSE:WFC), US Bancorp (NYSE:USB), PNC (NYSE:PNC) and JPMorgan (NYSE:JPM).

All of these banks could announce a quarterly dividend in the first quarter if they choose to go that route. If one of them do it, for competitive reasons, all of them would probably take the leap.

On Wednesday the Federal Reserve laid out the parameters for banks who are looking to offer or increase dividends.

Even though some banks fall within the guidelines, Goldman said dividends, even if offered or increased, will fall far below their former levels in the short term from the banks.

Goldman estimates a payout ratio of about 40 percent in relationship to former dividend payouts.

Bank of New York Mellon (NSYE:BK) and State Street (NYSE:STT) are also banks which also are allowede increase their dividends if they choose to.