Investment analysis of the common stocks of selected California banks. - Page 141 |
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12g |
amount o f r e t a i n e d e a r n in g s may ten d t o b r in g t h e i r r i s k
a s s e t r a t i o s more i n l i n e w ith th e New York C ity b a n k s •
To t h i s e x t e n t th e deg ree o f r i s k can d i s t o r t th e s ta n d a
r d e s t a b l i s h e d above i n r e g a rd t o minimum d iv id e n d y i e l d j
req u irem en t i n c o n ju n c tio n w ith p a y -o u t r a t i o s * For j
! example, Union Bank, which was shown as an example f o r
p a y -o u t r a t i o s above, had a r i s k a s s e t r a t i o o f &*5 t o 1
December 3 1 , 1955* 16 S in c e t h i s r i s k a s s e t r a t i o i s
r e l a t i v e l y h i g h , a s m a l l p a y - o u t r a t i o i s e x p e c te d * j
i Although s ta n d a r d s f o r d iv id e n d s a re im p o rta n t i n |
i !
I th e s e l e c t i o n o f bank sto c k p u rc h a s e s , th e f u tu r e
e x p e c te d d iv id e n d s p la y a more im p o rta n t r o l e i n th e
I
d e te r m in a tio n o f an in v e stm en t v alu e f o r bank sto ck s*
j
, The a n t i c i p a t e d f u t u r e d iv id en d s p e r sh a re may be c a lc u l
a t e d from th e i n d i v i d u a l bank d iv id en d p o l i c i e s th ro u g h
| an a n a ly s i s o f th e average p a s t p ay -o u t r a t i o s * The 1
! average should be f ig u r e d from s e v e r a l y e a r s i n th e p a s t
t o be r e l a t i v e l y c e r t a i n t h a t th e average p a y -o u t r a t i o
, i s th e bank’s p o lic y r a t h e r th a n th e r e s u l t o f wide
f l u c t u a t i o n s o f only a few y e a r s p a s t .
| From Table XVIII i t a p p e a rs t h a t t h e p a y -o u t
!! r a t i o s o f banks a re r a t h e r c o n s ta n t and fo llow somewhat <I
---------------------------------------------------------------------------------------------------------------------------------------- I
•^ B ly th and Company, ”Banks and Bank S h a r e s ,”
l o c . c i t * !
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| Title | Investment analysis of the common stocks of selected California banks. - Page 141 |
| Repository email | cisadmin@lib.usc.edu |
| Full text | 12g | amount o f r e t a i n e d e a r n in g s may ten d t o b r in g t h e i r r i s k a s s e t r a t i o s more i n l i n e w ith th e New York C ity b a n k s • To t h i s e x t e n t th e deg ree o f r i s k can d i s t o r t th e s ta n d a r d e s t a b l i s h e d above i n r e g a rd t o minimum d iv id e n d y i e l d j req u irem en t i n c o n ju n c tio n w ith p a y -o u t r a t i o s * For j ! example, Union Bank, which was shown as an example f o r p a y -o u t r a t i o s above, had a r i s k a s s e t r a t i o o f &*5 t o 1 December 3 1 , 1955* 16 S in c e t h i s r i s k a s s e t r a t i o i s r e l a t i v e l y h i g h , a s m a l l p a y - o u t r a t i o i s e x p e c te d * j i Although s ta n d a r d s f o r d iv id e n d s a re im p o rta n t i n | i ! I th e s e l e c t i o n o f bank sto c k p u rc h a s e s , th e f u tu r e e x p e c te d d iv id e n d s p la y a more im p o rta n t r o l e i n th e I d e te r m in a tio n o f an in v e stm en t v alu e f o r bank sto ck s* j , The a n t i c i p a t e d f u t u r e d iv id en d s p e r sh a re may be c a lc u l a t e d from th e i n d i v i d u a l bank d iv id en d p o l i c i e s th ro u g h | an a n a ly s i s o f th e average p a s t p ay -o u t r a t i o s * The 1 ! average should be f ig u r e d from s e v e r a l y e a r s i n th e p a s t t o be r e l a t i v e l y c e r t a i n t h a t th e average p a y -o u t r a t i o , i s th e bank’s p o lic y r a t h e r th a n th e r e s u l t o f wide f l u c t u a t i o n s o f only a few y e a r s p a s t . | From Table XVIII i t a p p e a rs t h a t t h e p a y -o u t !! r a t i o s o f banks a re r a t h e r c o n s ta n t and fo llow somewhat |
