OPINION: There are good reasons to make a contrarian investment as bank stocks are tumbling in the wake of the failures of Silicon Valley Bank and Signature Bank. Here are some possible winner stocks that pay nice dividend yields in the 4% to 6% range.
Bank stocks are tumbling in the wake of the failures of SVB Bank SIVB, -60.41% and Signature Bank SBNY, -22.87% ), but there are good reasons to make this contrarian investment.
Regulators won’t stop there if more trouble arises. “The FDIC, the Treasury and the Federal Reserve will ultimately do what they have to do to bring calm to the banking system,” Harbor Capital Advisors strategist Spencer Lerner said in a client call Monday. Read: It’s raining money on Bank of America. Inflows of over $15 billion reportedly seen amid SVB fallout
So-called superregionals including Fifth Third Bancorp FITB, -3.68% Truist Financial TFC, +0.69%, Regions Financial RF, -6.91%, U.S. Bancorp USB, -5.52% and M&T Bank MTB, -1.99% should be relatively unscathed, Ellison says. “These are the ones that can hang in there and get through it, and presumably take some share from the troubled and failed banks,” he adds. “I don’t think you sell the high-quality banks. I am not selling them.
Lapey, at Gabelli, highlights Glenville, N.Y.-based Trustco Bank TRST, +2.87%, one of his largest positions. The bank is conservatively managed, he points out, so it has virtually none of its capital base in debt instruments. It also has no exposure to crypto companies and venture capital-backed startups. “The two banks that failed were massively exposed to those sectors that are bubbles in the process of bursting,” Lapey says.
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