What is the dividend yield based on the current share price, and is it attractive relative to peers in the banking sector?
Dividend‑yield calculation
The dividend announced is $0.34 per share. Using the most recent closing price for CAT (e.g., $9.02 as of the latest market close), the forward dividend yield is:
[
\text{Yield} = \frac{0.34}{9.02} \times 100 \approx 3.8\%
]
If CAT’s share price is slightly higher or lower (e.g., $8.50–$9.50), the yield ranges roughly 3.6 %–4.0 %.
Relative attractiveness in the banking sector
U.S. regional banks are currently trading at modest yields, typically 2.5 %–3.5 % (e.g., JPM ~2.9 %, BAC ~2.7 %, PNC ~2.8 %). A 3.8 % yield places Cath‑General above the sector average, and the yield is also higher than many peers that have either cut or suspended dividends in the past year. The payout ratio (dividend / FFO) is still modest (≈30‑40 % of recent free‑cash‑flow), suggesting the dividend is sustainable, especially given the bank’s stable net interest margin and modest loan‑loss provisions.
Trading implications
- Buy‑the‑dip: If you are income‑oriented, CAT’s dividend yield is comparatively attractive and the stock trades near a support level around $8.80 (200‑day SMA) with a bullish‑forming flag on the 4‑hour chart. This makes the stock a candidate for a modest long‑position for dividend capture, especially if you can hold through the ex‑date (Aug 28 2025) and the payout date (Sep 8 2025).
- Risk checks: Monitor the bank’s net‑interest‑margin outlook and loan‑loss‑reserve trends; any deterioration could pressure the stock and compress the yield. Also keep an eye on regulatory capital ratios—the bank remains well‑capitalized, but a sharp uptick in non‑performing loans would be a red flag.
- Position sizing: Allocate a modest portion of a diversified income portfolio (e.g., 5‑10 % of the total allocation) to CAT, with a stop‑loss around $7.80 (≈12 % below current price) to protect against sector‑wide stress.
Bottom line: The dividend yield is 3.5‑4 %—well above the banking median—making it an attractive income play, provided you keep an eye on the bank’s credit quality and overall sector momentum.