We recently compiled a list of the 10 Best Dividend-Paying Stocks Under $15. In this article, we are going to take a look at where Banc of California, Inc. (NYSE:BANC) stands against the other dividend-paying stocks under $15.
During the bull market driven by the “Magnificent Seven” stocks, dividend stocks lagged in performance. Since the beginning of 2024, the Dividend Aristocrats Index has increased by only 5.50%, while the Nasdaq has risen by 13.6%. That said, the performance of tech stocks becomes less significant when considering the long-term returns of dividend stocks. Dividend-paying stocks with strong balance sheets and stable yields can offer investors consistent income, protection against market declines, and steady growth for their investments.
When investing in dividend stocks, it might seem logical to invest in stocks with the highest yields. However, according to analysts, concentrating solely on yield may not be the most effective investment approach. Not all dividend yields are equally secure, as companies under financial strain may suspend or cut their dividend payments. Therefore, investors are encouraged to prioritize the sustainability of dividends and, if possible, seek out companies with a track record of dividend growth. To know more about strong dividend payers, have a look at Best Dividend Stocks of All Time.
Historically, companies that consistently grow their dividends have outperformed those that do not pay dividends, while also exhibiting less volatility. Although dividends are not guaranteed and can fluctuate, just like in today’s time, they have played a major role in equity total returns over the decades. From 1930 to 2023, dividends and their reinvestment accounted for 40% of the annualized total return of the broader market, with the remaining return coming from capital appreciation.
Companies globally are distributing record dividends to shareholders, largely due to their robust balance sheets. With companies holding near-record levels of cash and liquid assets, they are increasingly returning this cash to investors through dividends. Global dividends grew from $1.23 trillion in 2020 to $1.66 trillion in 2023, according to a report by Janus Henderson. The firm forecasts total dividends to reach $1.72 trillion for 2024, up 3.9% on a headline basis.
A company’s dividend payout ratio is an important measure of how flexible its dividend policy is. Firms that only earn enough to cover their dividends or pay out most of their earnings as dividends might face risks from competitive pressures, as their cash flow may not be adequate to sustain operations. Moreover, companies with high dividend yields or, more critically, high payout ratios might be at risk of limited future growth, which could impact both share price appreciation and the potential for increasing dividends. According to data collected by Nuveen, stocks with the highest payout ratios have not been the strongest long-term performers. Over the past 20 years, companies with medium and medium-high payout ratios that paid dividends have generally delivered better performance.
Consistently growing dividends is a challenging target, as it requires companies to be financially very stable. For companies that are still in the growth phase and have lower share prices, evaluating dividend sustainability becomes a straightforward metric to consider. In this article, we will take a look at some of the best dividend stocks under $15.
Our Methodology:
For this list, we used a Finviz stock screener to find dividend stocks trading below $15 as of the close of July 31. From the initial list, we narrowed down the selection to companies that pay regular dividends to shareholders and possess strong dividend policies, ensuring consistent future dividends. From the resultant list, we picked 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s Q1 2024 database of 920 hedge funds and their holdings. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A small business owner in front of a terminal, making a deposit to her company’s bank account via the company’s services.
Banc of California, Inc. (NYSE:BANC)
Number of Hedge Fund Holders: 18
Share Price as of the Close of July 31: $13.98
Banc of California, Inc. (NYSE:BANC) is an American financial services company that offers a wide range of banking services, including commercial & business banking, specialty banking, and personal banking. Banks can be a promising investment, particularly in strong economies. When consumers are spending confidently and unemployment rates are low, banks often see increased profits and manage to keep loan defaults under control. In addition, banks are also known for their generous dividends. In 2023, the sector provided record dividends and was responsible for half of the global dividend growth.
Banc of California, Inc. (NYSE:BANC) recently announced its second quarter 2024 earnings and showed impressive growth from the prior year period. The bank generated nearly $260 million in revenues, up significantly from $58 million in the same period last year. Its net interest income came in at $230 million, growing from $186 million in the second quarter of 2023. In the second quarter, the company continued to make significant strides in implementing its plan, enhancing its franchise, and boosting core earnings power. It further lowered its cost of funds, increased the net interest margin, and grew average noninterest-bearing deposits despite a challenging interest rate environment. The company is on target with its controllable cost savings and is committed to developing a valuable long-term franchise with a strong deposit base and core operations.
2016 was a pivotal year for Banc of California, Inc. (NYSE:BANC), as it surpassed $10 billion in assets under management—a significant achievement for a bank that had less than $1 billion in assets just five years earlier. This milestone impressed investors, leading to a surge in the stock price to a post-recession high of around $22 per share. It also saw an increase in insider purchases during this period. The company has come a long way since then. At the end of 2023, the bank had nearly $39 billion in assets under management.
Banc of California, Inc. (NYSE:BANC), one of the best dividend stocks on our list, has been paying regular dividends to shareholders since 2003. The company currently pays a quarterly dividend of $0.10 per share and has a dividend yield of 3.11%, as of August 1.
Banc of California, Inc. (NYSE:BANC) was included in 18 hedge fund portfolios at the end of Q1 2024, compared with 21 in the previous quarter, as per Insider Monkey’s database. The stakes held by these hedge funds have a total value of roughly $230 million. With over 6 million shares, Centerbridge Partners was the company’s leading stakeholder in Q1.
Overall BANC ranks 4th on our list of the best dividend-paying stocks to buy under $15. You can visit 10 Best Dividend-Paying Stocks Under $15 to see the other dividend-paying stocks that are on hedge funds’ radar. While we acknowledge the potential of BANC as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued dividend stock that is more promising than BANC but that trades at less than 7 times its earnings and yields nearly 10%, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
