People’s United Financial: Acquisitions And Little Dividend Growth Means Don’t Buy

I have been writing a series of articles on community banks. Conservatively run community banks can provide stable and growing dividend income. In general, the banks that I have already written about showed up as one of five banks passing several screens assessing dividend, dividend safety, valuation, and volatility. Most of the banks I have covered are comparatively small with market capitalizations of roughly $500M-$1.2B. At the request of a reader, I am writing about People’s United Financial Inc. (PBCT), a larger regional bank with about 422 branches and a market capitalization over $7.3B.

The current yield is over 4.3% and the dividend has been raised for 27 consecutive years making the bank a Dividend Champion. The bank is also seemingly conservatively run with decent credit metrics and capital position. However, unlike most community banks. People’s United apparently has its eye on becoming considerably larger through acquisitions rather than organic growth. There is risk in this strategy. In addition, the dividend is growing very slowly. Furthermore, the bank is dependent on commercial loans. In my opinion, these negatives outweigh the positives and thus I am not a buyer.

Please read the complete article at my profile on Seeking Alpha.

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