Federal Reserve Chairman Ben Bernanke has committed the United States to a low interest rate environment through at least 2013, which makes emerging market banks such as Banco Marco SA (BMA, quote) and BBVA Banco Frances SA (BFR, quote) more appealing than American money center banks such as Bank of America Corp. (BAC, quote) or Citigroup Inc. (C, quote). Exchange traded funds such as FTSE Argentine 20 (ARGT, quote) and Wisdom Tree Emerging Market Small Cap Fund (DGS, quote) hold these stocks.
Banco Marco SA and BBVA Banco Frances SA are banks headquartered in Argentina that offer both a high dividend yield and strong grown prospects.
Consider: At present, the average dividend yield for the Standard & Poor’s 500 Index is around 2%. Banco Marco SA has a dividend yield of 9.12%. BBVA Banco Frances SA has a dividend yield of 16.13%.
Bank of America does not pay a dividend to its shareholders while Citigroup provides one of 0.13%. Bill Gross, head of PIMCO, is emphasizing stocks that pay high dividends due to the present investment conditions.
Dividend yields this high can mean there is trouble at the company or the underlying economy.
However, BBVA Banco Frances, now trading around $6.80, has a mean target price from the analyst community following the stock of $10.08 over the near term. In addition, the short float is minuscule is 0.41%.
Presently around $22.80, Banco Marco has a mean analyst target for the next year of $37.36. The short float is even tinier at 0.12% — a 5% short float is considered troubling.
Banks are the worst performing sector in the stock market this year. However, Banco Marco SA and BBVA Banco Frances SA offer exposure to the growing middle classes in Latin America, which will be imperative for investors seeking income and appreciation.
These consumers will have increasing needs for financial services from banks in the region. As detailed in previous articles on www.emergingmoney.com, Jim Jubak, MSN Money columnist, contends that this expansion of the middle class around the globe will be the most important investment trend of the decades ahead.