What’s not to like at SunTrust? The stock sports a 4% dividend yield, is trading at a significant discount (just over $53 per share on Friday, 1/4) relative to the average analyst’s 52-week price target of 73, and the the regional banking company’s business is concentrated in a growing part of the country, the southeast and mid-Atlantic regions. 

Over the past 12 months, the stock is down about 18%. That creates an attractive entry point for investors looking for a dividend paying stock in the financial sector.

Full disclosure: I haven’t bought in yet (still have to keep some powder dry), but I’ve been tracking SunTrust for a while, and if I were to buy a new stock today, SunTrust would be it. 

SunTrust does a good job of passing on earnings to shareholders. According to a recent presentation, the company passed 89% of net income to shareholders through dividends and share buybacks in 2017. The payout ratio has been steadily growing since the financial crisis ended. EPS growth has been steady as well.

And the company has made significant investments in technology to improve operational efficiency and customer self-service opportunities. 

Harkening back to my days as a reporter and editor for trade publications that went out to the real estate finance and banking industries, I recall that SunTrust consistently fared well on consumer surveys of customer service in the mortgage lending space. Consumers often give high ranks for customer service, ironically, to mortgage servicers that they don’t have to interact with much. That often is a sign that the lender has strong self service and online functionality. The best mortgage lender is often the one who just automatically deducts your payment each month, makes sure insurance and property taxes are paid on time, and doesn’t bother the customer too much.

That bodes well for operational efficiency as well as popularity with customers.

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