7 U.S. bank stocks with sustainable dividends to weather choppy markets

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We are looking for sustainable dividends from U.S. banks and financial services players prepared to weather short-term market issues

Sustainable dividends from U.S. banks and other financial services players prepared to weather short-term market tremors.Shares of major U.S. banks – and shares of many non-bank financial firms – have dropped on fears that more regional banks will collapse after the implosion of both Silicon Valley Bank and Signature Bank. Still, we think the top stocks in both segments will weather any fallout from today’s higher interest rates and the nervousness of U.S. depositors and investors.

For U.S. top banks, the federal government’s assurance that even uninsured depositors will get all their money back will likely steady the sector. In the meantime, lingering doubts could boost deposits for those bigger, more closely regulated banks. Those giants are also better placed to meet any new capital requirements or restrictions that may emerge.

At the same time, share price declines for non-bank financial services leaders – and their now-higher dividend yields – present a buying opportunity for dividend seekers. From a list of well-provisioned and profitable U.S. banks and non-bank financial companies, we zeroed in on those offering dividends. We then applied our TSI Dividend Sustainability Rating System. It awards points to a stock based on eight factors:Two points if it has raised the payment in the past five years.One point for operating in non-cyclical industries.Two points for a strong balance sheet, including manageable debt and adequate cash.One point if the company is an industry leader.

Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.

 

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