In fairness, the bank would send a mixed message to ask for TARP money with one hand while handing out chunky dividend checks with the other. Panhandlers shouldn't have holes in the bottoms of their tin cups.
However, this fascination with penny dividends rubs me the wrong way.
Citigroup and Bank of America aren't the only ones flicking copper at their shareholders. PremierWest Bancorp
What's the point? Even with their share prices falling into the single digits, it's not as if the new yields will win over conservative income investors. The sound of payout-slashing desperation should be enough to scare away dividend fans for some time.
So what's going on here? Is this just some bogus facade? Are the few banks who survive hoping that we forget this ever happened in a few years, as they proudly proclaim that they have paid decades of uninterrupted dividends?
Just keep your stupid pennies, okay? If things are that bad, you can probably use the money. Spare yourself the paperwork and postage, too.
If I want sustainable yields, I can probably do better by reading the latest issue of our Income Investor newsletter, or banking on stocks that are actually hiking their dividends. If your financial statements aren't making sense, you have no business giving out cents.
A penny for your thoughts? Just keep it, please.
Some other yield signs:
Longtime Fool contributor Rick Munarriz pays attention to yield signs. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. Bank of America is a former Motley Fool Income Investor recommendation. The Fool has a disclosure policy.