The option of investing in stocks that pay dividends looks more appealing, and bank stocks in the Northeastern and Mid-Atlantic region should be among those favorite industries, as older Baby Boomers turn 65, and their need for income versus capital appreciation grows, says Richard D. Weiss, Director of Financial Services at Janney Montgomery Scott LLC.
“We have a number of ‘buys,’ and that’s primarily due to dividends. As more investors seek yield in the low interest environment, you cannot find it among fixed income products unless you’re willing to go very long on a curve, we opine that investors will gravitate to dividend-paying stocks, including bank stocks,” he said.
Weiss recommends People’s United Financial Inc. (PBCT), although he gives it a “neutral” rating. He says it is a larger company in the Northeastern U.S. with solid core deposit franchises, which are generally attractive sellers to potential acquirers, and it pays a 5% yield.
“What I’m trying to do is to have two classes of ‘buy’-rated stocks because the rating system doesn’t work well when an investor objective is to receive a steady dividend stream versus capital appreciation. Therefore, we have several ‘neutral’-rated names that we find appealing,” Weiss said.
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