Several ETFs standout as avenues for investors to gain exposure to potentially larger buybacks and dividends from major banks, including the PowerShares KBW Bank Portfolio (NYSEArca: KBWB). KBWB has recently been lauded on a technical basis, but its fundamentals could be boosted if dividends and/or buybacks increase. [Big Bank ETF Boom Could be Afoot]
In terms of either 50% capital return increases or the highest payout ratio, KBWB’s top-10 holdings feature eight of the stocks mentioned here, including Citi, Bank of America, Wells Fargo, Comerica and KeyCorp. Those stocks combine for about 37% of the ETF’s weight.
Goldman Sachs and State Street combine for almost 16% of the PowerShares KBW Capital Markets Portfolio (NYSEArca: KBWC). KBW notes higher interest “1-2 years out” could be a positive for KBWB and KBWC.
The research firm also highlighted the PowerShares KBW Premium Yield Equity REIT Portfolio (NYSEArca: KBWY) and the PowerShares KBW High Dividend Yield Financial Portfolio (NYSEArca: KBWD) as attractive “not only due to their yields, but also performance YTD compared to their peers the iShares Mortgage Real Estate Capped ETF (NYSEArca: REM) and the Vanguard REIT ETF (NYSEArca: VNQ) (not only this year over other periods too).”
KBWD has a trailing 12-month of yield of 7.8% while KBWY’s is 4.86%.
Capital Return Estimates for CCAR Banks
Chart Courtesy: Keefe, Bruyette & Woods