SunTrust currently yields less than 2%, but Jefferies sees the bank’s payout ratio rising to 70%, according to 24/7 Wall Street.
Although KBWB features ample exposure to the largest U.S. money center banks, investors in the ETF would do well to listen closely to what the Federal Reserve is saying about interest rates. The reason being is that about half of the ETF’s 24 holdings are regional banks and that does not include the super-regionals held by the fund, such as U.S. Bancorp (NYSE: USB) and SunTrust. [Inside a Fast-Growing Bank ETF]
In addition to banks that are expected to be new dividend raisers, KBWB features robust exposure to the well-capitalized banks that in recent years have repaired their reputations for consistent dividend growth. For example, Wells Fargo, Dow component J.P. Morgan Chase (NYSE: JPM) an U.S. Bancorp combine for 22.9% of KBWB’s weight. [Another Bank ETF on the Rise]
Over the past four years, U.S. Bancorp’s dividend has nearly doubled while J.P. Morgan’s payout is up almost 60%. Wells Fargo’s dividend has nearly tripled over that period.
PowerShares KBW Bank Portfolio
