This Bank Stock Has the Highest Dividend Yield In Its Sector and Is Safe to Own

If you're looking for a high-yielding bank stock, it's hard to get much better than New York Community Bancorp (NYSE: NYCB  ) . Not only does the New York-based lender sport a 6.6% yield, but it's also one of the safest bank stocks to own today.

What makes these two things possible?

First, New York Community Bancorp doesn't write bad loans, which is the absolute "most important thing" about great bank stocks. Even at the height of the financial crisis, it charged off only 0.53% of its loan portfolio. This was dramatically better than even industry darling US Bancorp, which had a net charge-off ratio of 2.49% in the first quarter of 2010. And there's simply no comparison to the likes of Bank of America (NYSE: BAC  ) , which wrote off 4.7% of its loan book at its peak five years ago.

Second, New York Community Bancorp is phenomenally efficient. With an efficiency ratio in the low-40% range, it blows away competitors like Bank of America, which are struggling against bloated expense bases that may never be remedied -- click here to see how the nation's biggest banks stack up in this regard.

As Motley Fool senior banking specialist John Maxfield explains in the video below, the net result is that unlike Bank of America and others, New York Community Bancorp is able to pass on the lion's share of its revenue to shareholders via dividends.

Is New York Community Bancorp the best dividend option?
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Read/Post Comments (1) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 20, 2014, at 8:36 PM, MJP wrote:

    I have owned NYCB and like the stock, but finally sold it recently because it became too nerve-wracking wondering if they will be able to cover the dividend every quarter. Does it concern anyone that their dividend payout is nearly 100% of their earnings?? I'd like to get back in, but I have nightmares that the first quarter they can't cover their dividend it will be "look out below". Any thoughts out there? Thanks --

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2956440, ~/Articles/ArticleHandler.aspx, 9/5/2015 1:57:59 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

John Maxfield

John is The Motley Fool's senior banking specialist. If you're interested in banking and/or finance, you should follow him on Twitter.

Today's Market

updated 4 hours ago Sponsored by:
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASD 4,683.92 -49.58 -1.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 4:01 PM
BAC $15.65 Down -0.29 -1.82%
Bank of America CAPS Rating: ****
NYCB $17.40 Down -0.06 -0.34%
New York Community… CAPS Rating: ****