Banks that require funding will have 30 days to present a capital-raising strategy to regulators and then six months to implement it.

It is unlikely that any of the banks will require any additional taxpayer money.

J.P. Morgan Chase & Co. (NYSE: JPM), Goldman Sachs Group Inc. (NYSE: GS), MetLife Inc. (NYSE: MET), American Express Co. (NYSE: AXP), Bank of New York Mellon Corp. (NYSE: BK), BB&T Corp. (NYSE: BBT), Capital One Financial Corp. (NYSE: COF), U.S. Bancorp (NYSE: USB), and State Street Corp. (NYSE: STT) are in the clear in terms of having adequate capital cushioning.

The following banks will be required to raise these assigned amounts of capital:

• Bank of America Corp. (NYSE: BAC): $34 billion.
• Wells Fargo & Co. (NYSE: WFC): $13.7 billion.
• GMAC LLC (NYSE: GMA): $11.5 billion.
• Citigroup Inc. (NYSE: C): $5.5 billion.
• Morgan Stanley (NYSE: MS): $1.8 billion.
• Fifth Third Bancorp (NASDAQ: FITB): $1.1 billion.
• KeyCorp (NYSE: KEY): $1.8 billion.
• PNC Financial Services (NYSE: PNC): $600 million.
• Regions Financial Corp. (NYSE: RF): $2.5 billion.
• SunTrust Banks Inc.( NYSE: STI): $2.2 billion.

The banks will have until June 8 to develop a plan to raise the required capital and until Nov. 9 to implement it. They may choose to raise the money in a variety of ways. They may sell assets, court private investment or convert the government’s existing preferred shares into common stock.

Citigroup has already announced plans to convert a portion of the government’s $45 billion stake into common stock, a move that will give the federal government a 36% stake in the company. Other regional banks – such as Fifth Third Bank or Regions Financial – could be forced to take similar actions, but are loath to do so, as most of the moves would be dilutive to existing shareholders.

Citigroup has agreed to sell Nikko Cordial Securities to Sumitomo Mitsui Financial Group (OTC: SMFJY) for about $5.5 billion. The deal, which is to be completed by Oct. 1, is expected to boost the bank’s Tier-1 capital ratio by approximately 27 basis points.

Morgan Stanley plans to close its capital gap by selling assets or stock to private investors, a person briefed on the plan told The New York Times. And Wells Fargo said late yesterday that it plans to sell $6 billion in new common stock in an effort to raise required capital.

While Bank of America has said it doesn’t agree with the Fed’s conclusions, the bank yesterday outlined its strategy to accommodate the government’s demands. BofA is exploring the sale of such business units as its First Republic private-banking unit and asset manager Columbia Management, The Wall Street Journal reported.

The sale of those businesses could raise a combined $4 billion, David Hendler of CreditSights Inc. told The Journal. BofA could also get about $8 billion for its partial stake in China Construction Bank Corp.

Beyond that BofA would have the options of converting the government’s existing $45 billion investment, or $33 billion in private preferred shares, into common stock.

The Fed wants bank-holding companies to achieve a Tier 1 risk-based ratio of at least 6%, and a Tier 1 Common risk-based ratio of at least 4% by the end of 2010. The goal is to get banks to the point where they are stable enough that they can borrow from private investors without a Federal Deposit Insurance Corp. (FDIC) guarantee, people familiar with the matter told Bloomberg News.

“Going forward, we just need banks to be able to issue debt without the FDIC backing – that’s the next stage for these bank names in terms of evaluating their health,” Mark Bronzo, a money manager at Security Global Investors LLC, which oversees $21 billion in Irvington, N.Y., told Bloomberg.

If the banks fail to meet capital requirements, the government will step in to provide the necessary funds. However, it’s unlikely that any more taxpayer money will be needed, as about $110 billion of the original $700 billion in Troubled Asset Relief Program (TARP) funding remains.

Wall Street’s Reaction

The Dow Jones Industrial Average closed down 102.43 points, or 1.2%, yesterday, with the Dow Jones U.S. Financial Services Index down 3.78%. However, Wall Street’s reaction to the tests won’t be fully realized until the market opens later today (Friday).

“I think this will be a confidence-instilling announcement,” Federal Deposit Insurance Corp. Chairman Sheila Bair told a Senate panel Wednesday. “There will be additional needs for capital buffers for some institutions, but I think there will be mechanisms to do that within the next six months.”

Treasury Secretary Timothy F. Geithner said in an interview with PBS television’s “The Charlie Rose Show” that all of the institutions tested already have “significant cushions” of capital and that Americans have every reason to be confident going forward.

“The results will be, on balance, reassuring,” Geithner said.

But some analysts are skeptical about what the bank stress tests actually achieved, or if their standards of evaluation were even valid in the first place. After all, the tests have occupied resources from both the federal government and the private sector for months, and have increased stock market volatility.

“The banks are healing themselves, and it could have been done a lot faster if government had gotten out of the way instead of parking the emergency equipment in the middle of the road,” Gary B. Townsend, a former banking regulator who now runs his own investment firm, told The New York Times.

Also, many bank employees, and even Elizabeth Warren, who chairs the Congressional Oversight Panel for TARP, have expressed concern that the tests weren’t stringent enough.

Last month, Warren gave rise to speculation that another stress test might be needed by the end of the year, after she called the adverse economic scenario employed by the Fed “disturbingly close” to current economic conditions.

In the Fed’s most pessimistic economic forecast, for example, the government projects the unemployment rate will climb to 10.3% in 2010. But unemployment already hit 8.5% in March and many economists are predicting that it rose to 8.9% in April. If that’s the case, it’s not hard to imagine the national jobless rate reaching double digits by the end of the year.

“The stress tests will make a terrific contribution if they are tough and transparent,” Warren said. “If they are not, they will be useless.”

Still, despite the test’s alleged failings, there is a hope that with more transparency and a greater buffer of equity, investor confidence will be restored.

“This is sending a message that the banks need more capital, but their losses are manageable and the system itself is solvent,” Kevin Fitzsimmons, an analyst at Sandler O’Neill told The Times. “Whether it sticks is something else.”

Source: Bank Stress Tests: The Results Are in; Now What?

The U.S. Federal Reserve’s actions in cutting short-term interest rates to almost zero – together with a gentle rise in U.S. Treasury bond yields since the start of the year – have given us a steeply sloping yield curve, where long-term rates are about 3% above short-term rates.

What’s more, lending rates to corporate and personal borrowers are way up, far more than Treasury bond rates. That means one thing: In their new lending – particularly to small businesses – banks are making money like gangbusters.

At least, some of the banks are…

Let me explain.

The “steeply sloping yield curve” is bond-market jargon for a situation where long-term bond rates are far above short-term money market rates. In this case, the Fed has forced money market rates down to nearly zero, but has had much less effect on long-term bond rates, which have shown a tendency to rise, both because of the escalating budget deficit and because of the possibility of recurrent inflation arising from the Fed’s rapid expansion of the money supply.

Since banks generally borrow short-term money – in the form of demand deposits and short-term time deposits – and generally lend medium-term and long-term money, in the form of industrial loans and leases, automobile loans and home mortgages, a steeply sloping yield curve makes the banking business exceptionally profitable. Borrowing short-term at 1% and lending on a prime home mortgage at 5.5% or 6%, often with a “government” guarantee from Fannie Mae (FNM) or Freddie Mac (FRE), is good business however you look at it, for as long as the steep yield curve lasts.

In addition, the premium that industrial borrowers pay above U.S. Treasury bond rates has sharply widened, so banks can make much more money on their commercial loan and lease business.

That doesn’t mean we should all rush out and buy shares in Citigroup Inc. (C). For one thing, Citigroup is involved in all sorts of investment banking, and in a variety of trading businesses, most of which are either down sharply due to the recession or that have disappeared altogether. For another, we still don’t know how large and how toxic are the assets on Citigroup’s balance sheet.

Whereas regional banks have been coping quite well with their impaired-value assets, Citigroup has been forced to get a $300 billion guarantee on its assets from the Fed, and nobody knows if even that will be enough. The bank is now controlled by the government, and may be nationalized entirely.

Even at their nadir of 97 cents last week, Citi’s shares are nothing less than a lottery ticket. That ticket would have paid off if you’d bought last week, with a gain of 130% in a week, but neither I nor anyone else can give you accurate odds on whether it will pay off in the weeks to come.

Of the big banks with assets of more than $1 trillion, only one is attractive. Apart from Citigroup, Bank of America Corp. (BAC) made two foolish acquisitions in 2008, and is now struggling with the dodgy housing assets of Countrywide Financial Corp. and the huge investment banking problems of Merrill Lynch & Co. Inc. (which is likely to make much less money in a deep recession than it could in a boom).

J.P. Morgan Chase & Co. (JPM), similarly, has huge investment banking businesses and large trading businesses; its businesses in consumer and small business lending are relatively modest. And the other two behemoths that now have conventional banking licenses, Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS), still are primarily investment banks, with almost no consumer and small business banking operations.

Of the trillion-dollar guys, that leaves Wells Fargo & Co. (WFC). Wells Fargo needed money in 2008 – it got a $25 billion capital infusion from the Troubled Assets Relief Program (TARP) – because it bought the retail bank Wachovia Corp., which was struggling with its own problems.

Wachovia was in difficulty because of its foolish top-of-the-market purchase of housing lender Golden West Financial in 2006. However, the combined Wells Fargo/Wachovia unit remains primarily a consumer- and small-business-banking operation, with a huge nationwide branch network and a relatively small investment-banking business. What’s more, there are clearly costs that can come out of the merged group because of their overlap.

Wells Fargo Chairman Richard M. Kovacevich has made snotty comments about the “asinine” federal bank stress test, wants to repay the TARP money, and recently cut WFC’s dividend by 85% to conserve capital. However, if the combined bank is as profitable as it should be, Kovacevich may well be able to repay TARP and restore the bank’s dividend payout surprisingly quickly.

The current dividend yield at 1.5% is nothing to write home about, but at around 85% of tangible net asset value, Wells Fargo is a “Buy” – and don’t forget, if and when Kovacevich restores the dividend, that yield will jump to 9.8%.

Once you leave the trillion-dollar guys, there’s a big gap – the next-largest banks are The PNC Financial Services Group Inc. (PNC) and U.S. Bancorp (USB) at around $290 billion. These regional banks are generally more attractive currently – provided that their bad assets are under control and that they operate in an economically attractive part of the country.

These banks have little or no involvement in investment banking, and those banks that concentrate on mid-market corporate customers and high-quality consumers should have huge current earning capacity – a multiple of that before the meltdown. That will enable them to take care of further nasty surprises in their asset book and leave a lot over for investors.

Of the Top 12 U.S. banks I surveyed in a special Money Morning story a few weeks ago [actually 13, if you include a separate report I did on Fifth Third Bancorp (FITB)], PNC was among the riskier institutions because of its acquisition of National City Bank – an operation as large as itself and based primarily in troubled Ohio and Michigan.

Bank of New York Mellon Corp. (BK) and State Street Corp. (STT) are both oriented toward investment institutions and larger corporate and commercial clients, with perhaps less upside potential from the current steep yield curve. Other banks appear to be having more difficulty with their loan portfolios, or – as is the case with Capital One Financial Corp. (COF) – are have oriented themselves toward high-risk credit card lending, which may still show further problems.

Thus, my favorite profit play to emanate from this banking-ranking exercise is the Minneapolis-based U.S. Bancorp, which operates in the upper Midwest and Northwest from its home market of Minneapolis all the way through to Seattle, an area with neither huge industrial problems, nor the remnants of a huge housing bubble. USB has also cut its dividend and wants to repay its $6.6 billion TARP funding: U.S. Bancorp Chief Executive Officer Richard K. Davis has been as rude as Wells Fargo’s Kovacevich on that topic, calling it a “giant bait and switch.”

U.S. Bancorp is currently selling at 130% of tangible net asset value, with a current dividend yield of only 1.5%, but a potential yield of 14% if and when Davis manages to repay TARP and restore the dividend.

Remember, too: Banks traditionally sold at 250% to 300% of net asset value. Once their dividends are restored, Wells Fargo and U.S. Bancorp should have every chance of reaching that level again – they will deserve to on the basis of the dividend yield and earnings power alone.

It may take two years – or even three – but a capital gain of 100% or so, on top of a juicy dividend yield, will make it well worth the wait.

Source: As Resurgent U.S. Banks Shift Into Profit Mode, Hitch a Ride With These Two for Gangbuster Returns

I’m happy to report that it wasn’t an oversight: The reality is that Fifth Third – with $120 billion in assets – didn’t quite make the cut, since it’s actually not one of the Top 12 U.S. banks. But given the high level of reader interest in our report (which ran Wednesday), I thought it was worth a look.

Alas, while it isn’t one of the Top 12 banks, Fifth Third is another “Zombie,” lurking in the undergrowth, seeking new victims (investors).

A regional bank based in Cincinnati, Fifth Third has operations in the Midwest, most notably in Ohio and Michigan. It also has some operations in Florida. At first glance, it looks like SunTrust Banks Inc. (STI) or Regions Financial Corp. (RF), both of which I classified as “Walking Wounded,” one of the four ratings I created to classify the banks’ health, and the rating that’s a notch higher than the dreaded “zombie” label, which was affixed to the worst banks in the group (is the worst of the group.

(The ratings, from worst to first, are: Zombie, Walking Wounded, Risky but Proud, and Hidden Gems.)

However, while the pattern of Fifth Third’s 2008 operations was similar to SunTrust and Regions, the Ohio bank’s results were significantly worse. Both Regions and Fifth Third reported losses for 2008 ($5.6 billion and $2.2 billion, respectively) after substantial goodwill write-offs. But Fifth Third also notched a $1.2 billion loss for 2008 – before goodwill write-offs, while Regions Financial made a $300 million profit. Fifth Third has slashed its quarterly dividend to a nominal 1 cent per share.

Though there are some positive aspects to note. For instance, much of Fifth Third’s fourth-quarter loss was due to its transferring $1.3 billion of troubled loans to “held-for-sale” status, causing an immediate write-off that worsened published results, compared to its peers.

On balance, however, Fifth Third’s situation is worse enough than Regions’ – its closest Big-12 analogue – that I concluded it belonged in the “Zombie” category, as opposed to the “Walking Wounded.”

Having said that, however, let me say that I have considerable sympathy for the bank and its management team. Citigroup Inc.’s (C) zombification came from unintelligent aggression over a period of 30 years, inventing many of the current financial crisis’ most-toxic products (such as auction rate preferred stock). And Bank of America Corp.’s (BAC) zombification came from – not one, but two – catastrophically foolish acquisitions within a year: Countrywide Financial Corp. and Merrill Lynch & Co. Inc.

In Fifth Third’s case, there was no malice – Fifth Third did not invent any of the unsound idiocies that have caused global financial markets to collapse, nor did it go on an aggressive acquisition binge. Fifth Third was simply concentrated in two of the most economically troubled states – Ohio and Michigan.

In early 2008, Ohio had the highest rate of mortgage defaults in the United States – not because of its speculative frenzy in 2005-06, but because it had an exceptionally high proportion of borrowers whose ability to afford a mortgage was marginal.

U.S. President Barack Obama’s stimulus plan, targeted towards lower-income households and hard-hit areas, may help Fifth Third’s business more than it will help other banks, in which case Fifth Third could edge back towards recovery.

But as it stands now, the bank has one foot in the grave, qualifying it for “Zombie” status

Source: Fifth Third (FITB), a Medium-Sized “Zombie” Bank

This from Mike:

If the global financial crisis has taught investors one thing, it’s that now is not the time to gamble with your money or your prosperity.

More companies have been bought, bailed out or bankrupted since this financial crisis began than most of us have seen in our lifetimes. And even as Wall Street’s dominoes keep falling, no one can be sure if the worst is over.

From here on – recession or not – targeting dividend stocks is one of the few strategies that will deliver income safely and efficiently.

In theory, dividends should prop up an investor’s portfolio during uncertain periods, or in market downturns. That’s because even if a company’s stock price falls, executives do all they can to maintain the firm’s dividend payout. That’s part of the reason that, over time, dividends have accounted for a major portion of investors’ total returns.

“Dividends are a nice anchor in a turbulent market,” said Judith Saryan, manager of Eaton Vance Dividend Builder Fund (EVTMX), FoxBusiness last year.

Or anytime. In fact, over the last 100 years, 40% of a stock’s total return is from dividends. That’s not surprising. According to a study by Ned Davis Research Inc.,  dividend-paying Standard & Poor’s 500 stocks rose by an average of 9.4% a year between 1972 and June of last year, well ahead of non-dividend-paying stocks, which rose by only 1.8% annually during the same period.

“Dividends are a sign of quality,” said Todd Ahlsten, manager of Parnassus Equity Income (PRBLX), said in an interview last year. “They force management to look at cash flow and how it invests in its business.”

But not all dividends are created equal. As losses mount, Standard & Poor’s 500 heavyweights have been putting their dividends on the chopping block, cutting or outright eliminating them for an indefinite time period.

And these aren’t fringe companies and chump change we’re talking about…

General Motors Corp. (GM), Ford Motor Corp. (F), Sprint Nextel Corp. (S), MBIA Inc. (MBI) – their dividends are gone.

And Citigroup Inc. (C), Bank of America Corp. (BAC), Fifth Third Bancorp (FITB) reduced their dividends to a mere penny. Fannie Mae (FNM) lowered its to 5 cents in August and hasn’t paid one since.

Nor does the list end there.

Just yesterday (Thursday), in fact, motorcycle icon Harley Davidson Inc. (HOG) slashed its dividend 70%, the first such reduction since 1993. The move was aimed at conserving cash, but sent Harley’s shares down 8%. in a move that was aimed at conserving cash. And the Dow Chemical Co. (DOW)– facing credit-market uncertainty, lower product demand and legal problems related to a failed joint venture – yesterday cut its dividend 64%, the first such move in the company’s 112-year history.

But there are still hundreds of companies holding their ground in the global financial crisis.

These firms understand that continued growth and success depends on a large body of investors. And to keep them on board the companies must maintain – and hopefully increase – their dividend payouts.

DRIPS Aren’t Dropping

With the stock market’s wrenching decline, many company’s shares are trading at bargain levels. A company that’s been able to maintain its dividend usually represents a better value to its shareholders.

In the reverse situation, where stock values soar, dividend yields fall, meaning income investors have to settle for lower returns.

So, with stocks down and yields high, income investors should consider starting or stepping up dividend reinvestment plans (DRIPS).

In DRIPS, the dividends investors would normally receive as cash are reinvested back into the stock under their name. To start, investors often don’t even need as much as the price of a full company share.

For example, if you invest $20 in a stock that trades for $100 per share, the DRIP will buy you one-fifth of a share of that stock. The dividend is reinvested accordingly, as well.

Over time, money is reinvested back into the stock, giving you more shares. And with more shares, the more dividend income you’ll receive.

Among other advantages, although there is usually a nominal transaction cost involved, the DRIPS’ automatic reinvestments allow investors to skip full-blown brokerage fees, which aren’t conducive to such small purchases.

Among the cons, most DRIPs require investors to be registered shareholders, which entails a little more paperwork than being a regular, or beneficial, shareholder. To enroll in a DRIP plan, investors must buy shares through a transfer agent. The process can take up to eight weeks before your account is opened and fully registered.

Some DRIP companies also have maximum amounts you can invest and hold in their stock. And they vary by time periods – monthly, quarterly, annually and lifetime.

For the public companies that offer the dividend plans, DRIPs provide a stable base of long-term shareholders. And often, these value-minded investors tend to buy more when share prices are down, as opposed to short-term traders, who are apt to bail out on a price decline.

For example, 71% of chemical company RPM Inc.’s (RPM) shareholders are enrolled in its DRIP. And more than 64% of Aflac Inc.’s (AFL) shareholders are enrolled in its DRIP, according to DRIP Central.

More than 1,600 public companies and American Depository Receipts (ADRs) have DRIPs, offering a wide choice of industry and market preference to potential investors.

But with so many to choose from, targeting the best ones can be a challenge without a broker helping you.

The Best DRIPs are…

The best DRIPs are from companies that have a high-yield and a track record of increasing their dividends.

In addition to RPM and Aflac, here are a few DRIP companies to keep your eye on. Not only have they hung onto their dividends in the worst financial crisis since the Great Depression, some have increased their payouts.

• Coca-Cola Co. (KO): There’s a reason “Coke” is the second most recognizable word in the world. The world’s biggest beverage-maker recently beat fourth-quarter earnings expectations, largely due to its ability to cut costs and promote demand with a rotating file of products. The company kicks out a 38-cent dividend every quarter. At its current share price of around $44.30, that’s a 3.45% yield. If that’s not enough, know that Warren Buffet owns 8.6% of the company.

• Intel Corp. (INTL): Intel is the market leader among chipmakers, dominating its competition by continually being the first to the market with the best product. It pays a 14-cent dividend every quarter, which at its current stock price represents a 4.07% yield.

• The Hershey Co. (HSY): The Pennsylvania-based candy and food maker has been a recession stalwart. It began paying dividends in 1930 – meaning it’s been making the quarterly payouts longer than most companies have even been around – and has been increasing them for 32 consecutive years, according to The Money Paper. Right now, its 30-cent quarterly dividend represents a yield of 3.32%. With its stock hovering a few dollars above its 52-week low, many of its DRIP investors are probably loaded up on Hershey shares like Halloween candy.

• Microsoft Corp. (MSFT): Microsoft is the largest software producer in the world, and has a firm grip on that title. The slowing demand for computers and computer software has taken a toll on Microsoft, but the projection of the industry and Microsoft’s dominance makes it one of the most stable tech stocks out there. Its current dividend yield is 2.72% on its shares, which kick out a 13-cent dividend every quarter.

• Exxon Mobil Corp. (XOM): Like the above companies, Exxon doesn’t need much of an introduction. The oil giant is one of the world’s largest companies, having paid investors dividends since 1882. Its 2.13% yield isn’t the highest in this small group of companies, but Exxon’s share price is one of the most stable.

If that’s not enough, here’s an extensive list of DRIP companies, and their minimum and maximum investment requirement.

It also details how much dividend income a company pays, how often, how long its paid dividends and whether it increased its dividend over time.

Editor’s Note: This is the latest installment of a new series that will explore ways for investors to recover from the U.S. financial crisis.

Source: For Dividend-Seekers, Financial Crisis Means it’s Time to Dip Into DRIPs

This from Money Morning:

While the U.S. government’s plan to invest $250 billion into U.S. financial institutions has been billed as a strategy that will bolster the health of the banking system and also jump-start lending, the recapitalization plan is likely to have a secondary effect – one that whipsawed U.S. taxpayers likely won’t be very happy to learn about.

Those billions are a virtual lock to set off a merger tsunami in which the biggest banks use taxpayer money to get bigger – admittedly removing the smaller, weaker banks from the market, but ultimately also reducing the competition that benefited consumers and kept the explosion in banking fees from being far worse than it already is.

One last point: Experts say that takeovers financed by the government infusions are likely to have less of a beneficial impact on the economy than an actual increase in lending levels would have. And because so much of this money will be used for buyouts, the reduction in the benchmark Federal Funds target rate announced yesterday (Wednesday) by central bank policymakers will likely do very little to actually spur lending, experts say.

Fueled by this taxpayer-supplied capital, the wave of consolidation deals is “absolutely” going to accelerate, Louis Basenese, a mergers-and-acquisitions (M&A) expert and the editor of The Takeover Trader newsletter, told Money Morning.

“When it comes to M&A, there’s always a pronounced ‘domino effect.’ Consolidation breeds more consolidation as industry leaders conclude they have to keep acquiring in order to remain competitive.”

Lining Up for Deal Money

Late last week, the Pittsburgh-based PNC Financial Services Group Inc. (NYSE:PNC) became the first U.S. bank to make use of the government’s Troubled Assets Relief Program (TARP), announcing plans to purchase the beleaguered National City Corp. (NYSE:NCC) for $5.2 billion. To help finance the purchase, PNC will sell $7.7 billion worth of preferred stock and warrants to the U.S. Treasury Department, as part of that department’s bank-recapitalization program.

With regards to that program, U.S. Treasury Secretary Henry M. “Hank” Paulson recently said – yet again – that the government’s goal was to restore the public’s confidence in the U.S. financial services sector – especially banks – so that private investors would be willing to advance money to banks and banks, in turn, would be willing to lend, The Wall Street Journal reported.

“Our purpose is to increase the confidence of our banks, so that they will deploy, not hoard, the capital,” Paulson said last week.

Whatever the Treasury Department’s actual intent, the reality is that banks are already sniffing out buyout targets, thanks to the TARP money. Indeed, they’ve been quite open about it during conference calls related to quarterly earnings, or in media interviews.

Take the Winston-Salem, N.C.-based BB&T Corp. (NYSE:BBT). During a conference call that dealt with the bank’s third-quarter results, Chief Executive Officer John A. Allison IV said the Winston-Salem, N.C.-based bank “will probably participate” in the bailout program, accepting federal infusions. Allison didn’t say whether the federal money would induce BB&T to boost its lending. But he did say the bank would probably accept the money in order to finance its expansion plans, The Wall Street Journal said.

“We think that there are going to be some acquisition opportunities – either now or in the near future – and this is a relatively inexpensive way to raise capital [to pay the buyout bill],” Allison said during the conference call.

Talk about brazen. However, he’s not alone. For instance, there’s also Zions Bancorporation (NASDAQ:ZION), a Salt Lake City-based bank that’s feeling the pain due to losses from bad real-estate loans. On Tuesday, Zions announced it would be receiving $1.4 billion in capital from the Treasury Department – cash it would use to boost lending and keep paying a dividend, albeit at a reduced rate.

“As a strong regional bank with a major focus on financing small and middle-market businesses, we are pleased to have this additional capital to better serve the lending needs of customers throughout the Western United States,” Chairman and CEO Harris H. Simmons said. “We expect to deploy this new capital in the form of prudent lending in the markets we serve. This new lending will be good for our country’s economy, our customers and our company.”

However, during a recent earnings conference call, Zions Chief Financial Officer Doyle L. Arnold said that while new capital might allow it to boost lending, the increase wouldn’t necessarily be a dramatic one. The Journal said. Besides, Zions will also use the money “to take advantage of what we would expect will be some acquisition opportunities, including some very low risk FDIC-assisted transactions in the next several quarters.”

Buyouts Already Accelerating

The reality is that – with all the liquidity the world’s governments and central banks have injected into the global financial system – the global game of “Let’s Make a Deal” has already become a reality.

Indeed, as WSJ.com reported a week ago, global deal volume for the year has already passed the $3 trillion level – only the fifth time that’s happened, although it took about three months longer this year than it did a year ago.

This time around, the new kings of deal making aren’t such highly compensated “Masters of the Universe” as The Blackstone Group (NYSE:BX) LP’s Stephen A. Schwarzman, or KKR & Co. LP’s Henry R. Kravis, The Journal’s blog reported. Instead, they are the much-lower-paid – but decidedly more powerful – civil servants of the U.S. and U.K. governments: Treasury Secretary Paulson, U.S. Federal Reserve Chairman Ben S. Bernanke, U.K. Prime Minister Gordon Brown and Chancellor of the Exchequer Alistair Darling, the Web site stated.

At a time when the global financial crisis – and the accompanying drop-off in available deal capital (either equity or credit) – has caused about $150 billion in already-announced deals to be yanked off the table since Sept. 1, liquidity from the U.S. and U.K. governments have ignited record levels of financial sector deal making.

According to Dealogic, government investments in financial institutions has reached $76 billion this year – eight times as much as in all of 2007, which was the previous record year. And that total doesn’t include the $125 billion the U.S. government is investing in the large U.S. banks as part of its rescue package, the similar amount it may invest in smaller banks, or other deals that the feds are helping engineer (JPMorgan Chase & Co.’s (NYSE:JPM) buyouts of The Bear Stearns Cos. and Washington Mutual Inc. (WAMUQ) are two such examples).

When the dust settles on this buyout boom, we may well have a record in hand that’s even less beatable than Joe DiMaggio’s 56-game hitting streak. That’s because with the Fed, the U.K. and other governments and central banks doling out the capital, there’s no financial-sector equivalent of Kenny Keltner to bring this buyout fest to an abrupt close. That means that the “hits” – the buyout deals – will just keep coming.
If You Can’t Beat ‘em… Buy ‘em?

When it comes to identifying possible buyout targets, M&A experts such as The Takeover Trader’s Basenese say there are some very clear frontrunners.

“I’d put regional banks with solid footprints in the Southeast high on the list, and for two reasons,” Basenese said. “First, demographics point to stronger growth [in this region] as retirees migrate to warmer climes – and bring their assets along for the trip. Plus, the Southeast is largely un-penetrated by large national banks. An acquisition of a regional bank like SunTrust Banks Inc. (NYSE:STI) would provide a distinct competitive advantage.”

With a lot of bigger deals already in the books, many analysts agree with Basenese’s assessment, and are now watching to see if regional banks will be the next to succumb to the dealmaker’s bid. Indeed, earlier this month, Matthew Schultheis, a senior analyst at Boenning & Scattergood Inc., told a reporter that he expected this to be a “trend that continues at least through the first half of ’09, unless some of these [companies] stabilize. It could even last beyond that.”

There’s a very good reason that smaller players may be next: Big banks and small banks have the easiest times – relatively speaking, of course – of raising capital. It’s toughest for the regional players. Big banks can tap into the global financial markets for cash, while the very small – and typically, highly local – banks can raise money from local investors. Regional banks have a tougher time, says Doug Landy, a partner in the U.S. banking practice of the law firm of Allen & Overy.

“A regional bank lacks both the international access and the local character,” Landy told The Associated Press.

Several big regional banks at least acknowledged the possibility of buyouts on recent earnings conference calls, The Journal reported.

The Cincinnati-based Fifth Third Bancorp (NYSE:FITB) talked about raising $1 billion in capital by selling non-core assets. Bank executives said that a difficult 2009 is “a view that continues to seem likely to us.” They confirmed discussions with a number of possible investors or asset-purchasers, and said they were “confident that an attractive transaction would be available to us as the opportunity and timing are appropriate including the ability to generate capital in excess of our original expectations.” Earlier this week, however, it announced that it was getting $3.4 billion in TARP funds, the Cleveland Plain Dealer newspaper reported.

Clearly, the bank isn’t thinking in terms of an outright sale, or at least doesn’t admit to that publicly.

One other potential buyout candidate includes Huntington Bancshares Inc. (NASDAQ:HBAN), a Columbus, Ohio-based regional that just received a $1.4 billion federal infusion of its own, the Plain Dealer said.

Who will be doing the buying? The Takeover Trader’s Basenese tells investors to “also look for banks with foreign ownership” to be on the prowl for acquisitions.

“Just like Spain’s Banco Santander SA (ADR: STD) [which earlier this month said it would buy the 76% of Philadelphia-based Sovereign Bancorp Inc. (NYSE:SOV) it didn’t already own for about $1.9 billion], foreign-based banks will likely jump at the opportunity to expand their U.S. presence at a discount,” Basenese said. “M&T Bank Corp. (NYSE:MTB) fits the bill, as Allied Irish Banks PLC (ADR: AIB) already owns a 24% stake.”

Then there’s the Minneapolis-based U.S. Bancorp (NYSE:USB), which is one of the few regionals still in a strong position. CEO Richard K. Davis has reportedly rejected the idea of buying large banks that are already in trouble and was asked if the new rescue plans might change his mind.

“It makes it a little easier to do those things,” Davis told The Journal. “But first and foremost, whether the capital is less expensive or the opportunity that TARP is present, we’ll continue to look at deals on an accretive basis where they make sense and where they would fit into this company’s long-term structure. So it would definitely make it more attractive, and so some of our positioning and our targets look more attractive and our valuation is easier now.”

There’s something else to consider, Davis said.

“To the extent that [a deal] has to hit all of the normal bellwether marks and the expectations we have for the near term and long term, it still has to be a good deal. So it doesn’t really change our philosophy, but it does make it easier to find our way to partnerships that might be more accretive sooner.”

Basenese, the M&A expert, believes that Goldman Sachs Group Inc. (NYSE:GS) and Morgan Stanley (NYSE:MS) will be “big spenders,” using the TARP funds to help accelerate their conversions from an investment bank to a bank holding company – a transition that will require them to bulk up their deposit bases. And the quickest way to do that is to buy other banks, Basenese says.

“One thing [the wave of deals] does is to restore confidence in the sector,” Basenese said, “It will go a long way in convincing CEOs that it’s safe to use excess capital to fund acquisitions, and to grow, instead of using it to defend against a proverbial run on the bank.”

Source: Billions in Bank Rescue Funds are Fueling Buyout Deals, and not the Increase in Loans That Would Help Ease the Financial Crisis

More from The Smart Profits Report:

When it comes to investing, the ability to play solid defense can ease you through turbulent times much better than most ordinary investors. And the concept here is simple: Defensive investing means having some strong, dividend-paying companies in your portfolio.

A 72-Year History Of Top Performance

The two main concepts that dominate the stock market climate are fear and greed. While they’re always prevalent, smarter investors know better than to base their decisions on fluctuating sentiments like these.

Instead, it’s better to look for long-term drivers – like earnings growth, cash, and the ability of companies to pay dividends to their shareholders.

History shows that the latter is a particularly smart way to go. From 1935 to 2007, more than 40% of the S&P 500’s total return came from reinvested dividends.

The beauty of dividend-yielding stocks is that they work well in both rising and falling markets. SensibleStocks.com reports that during the bull market of 1982 to 2000, dividend stocks actually outperformed non-dividend payers by a considerable margin, despite the underlying share price appreciation.

And in volatile, sinking markets like we’re experiencing now, it’s comforting to know that you’ve still got a source of income throughout the madness. You’re essentially being paid for your patience, rather than selling off like everyone else.

Let’s look at some more benefits…

Dish Me Some Dividends… Three Reasons To Invest In Dividend-Yielders

Lowers Cost: When you’re picking up a regular dividend payment per share every quarter, over time, it reduces the price you originally paid for the shares. It’s essentially like buying a house, then renting it out to offset the payment and pick up income, while the underlying asset appreciates at the same time. And of course, since the Jobs Growth and Tax Relief Reconciliation Act of 2003, investors have paid lower taxes on dividends.

Provides Stability During Downturns: When the broader stock market is under pressure and share prices are falling, stocks that pay dividends are often considered one of the “safer haven” investments, since investors are still receiving income. In turn, it’s good PR for a company, with the stock attracting more investors and the share price potentially rising as a result. Pay attention to the level of insider ownership of a stock here. This is not a hard and fast rule, but if insiders hold a big chunk of the company themselves, they’re less likely to be reckless with its money through overly ambitious projects or ill-advised buyouts, and may well pay greater attention to shareholder interests and dividends.

Keeps Management In Line: When an executive team is dishing money back to its shareholders, not only does it show sound business acumen to be able to do that in the first place, it also keeps them honest. Knowing that dividend payments must be met reduces the chances that they’ll fritter your money away on wasteful projects.

Of course, there are pitfalls, too. So before I get to a couple of investment options for you, let’s look at those…

Dividend Drawbacks

Dividend Reduction Or Suspension: At a time when obtaining credit is tighter than ever before, it’s much more likely that companies will reduce or suspend their dividend payments. This is usually a last resort, as it signals to the world that the company is having trouble raising cash, which can, in turn, severely impact its share price.

Twice The Tax… And Higher In 2010? Naturally, the IRS needs to grab its piece of the pie – and when it comes to dividends, it’s a double-whammy. First, it claims the regular corporation taxes from the company. Then, when the company passes what’s left down to its shareholders, those investors are then taxed on what they receive. In addition, the Jobs Growth and Tax Relief Reconciliation Act that I mentioned a moment ago expires in 2010, so we may see dividend taxes rise when it does.

Lack Of Investment Options: Some argue that while companies should be praised for rewarding shareholder loyalty through dividends, it may also mean that it can’t find other investment options, or projects that would accelerate the company’s growth.

And beware companies that offer sky-high dividend yields. It could merely be a crafty way to mask bigger problems. Automakers like General Motors (NYSE: GM) and Ford (NYSE: F) are good examples, as are some of the beaten-up financial stocks like Citigroup (NYSE: C).

And as share prices drop, dividend yields rise, which can be a false dawn. Bottom line: If a company isn’t growing its earnings or its cash-flow has shrunk, it may well be a bad sign. Make sure you do your regular due diligence.

Where To Look For The Best Dividends

Right now, two of the best dividend-yielding sectors are Consumer Staples and Telecom.

In the upcoming November Xcelerated Profits Report issue, my colleague Jim Stanton is recommending one of the best companies within the Consumer Staples sector, which pays a dividend. One of the advantages that this sector has during a downturn or recession is that it continues to generate revenue through essential repeat business. After all, consumers always need everyday household items.

(As an aside, you can get your hands on Jim’s specific Consumer Staples recommendation by signing up for the Xcelerated Profits Report. Just click this link for more details).

In the telecom sector, firms like Verizon (NYSE: VZ) and AT & T (NYSE: T) boast some rock-solid financials, allowing them to pay a 6.8% dividend ($1.84 per share annually) and 6.3% ($1.60 per share annually).

In the current climate, though, if you don’t want to take the chance on individual companies, you can always diversify and lower your risk by buying ETFs that hold dividend-yielding companies. Take a look at…

SPDR S&P Dividend ETF (AMEX:SDY): Holding stocks like Bank of America (NYSE: BAC), Pfizer (NYSE: PFE), Fifth Third Bancorp (Nasdaq: FITB) and Consolidated Edison Inc (NYSE: ED), the fund tracks the price and yield performance of stocks in the S&P High Dividend Aristocrats index.

PowerShares High Yield Dividend Achievers (AMEX: PEY): This fund’s results try to correspond to the Dividend Achievers 50 Index. Around 80% of its holdings are in companies that have consistently raised their dividends. Its holdings include Bank of America, Keycorp (NYSE: KEY), American Capital Strategies (Nasdaq: ACAS), BB&T Corp (NYSE: BBT) and Comerica (NYSE: CMA).

Source: These Dividend Stocks Keep On Giving… Even As The Market Keeps Falling

Right there in big capital letters was the advice to buy banks, with the caveat that you should do it selectively.

And no, as it turns out, I wasn’t dreaming.

The article argues that valuations are low and the companies still have significant earnings power.

Last week’s sharp rally in the financials gave investors some hope that the banks were done cratering. And many took Wells Fargo’s (NYSE: WFC) strong earnings report as a sign that we’ve seen the worst in the sector.

…But The Worst Isn’t Over Within Financial Investments

The way I see it, this magazine cover reinforces the idea that the bottom is nowhere in sight.

Now I’m not a conspiracy theorist, despite my belief that the 1985 NBA draft was rigged so that the Knicks would-thankfully-get Patrick Ewing. Nor am I a Chicken Little, as I believe any of my regular readers can attest to.

But while I’m not about to say the sky is falling, I do believe bank stocks will for a while.

This is not a stance I take lightly, especially considering that Mt. Vernon Research Investment Director Karim Rahemtulla, is well-schooled in picking and choosing from the financial sector. In fact, using his deep in the money covered call strategy, he has actually racked up gains on companies like JP Morgan, Wells Fargo, and US Bancorp.

(If you are going to get involved in financial investments, you really should only pick the stocks and strategies that Karim recommends in Xcelerated Profits Report.)

If anyone can pick winning stocks in a losing sector, it’s Karim.

But you have to look at it this way: if some of these banks needed to raise money and were offering bonds at a competitive rate, would you help finance them?

Would you buy a Lehman Brothers (NYSE: LEH) bond maturing in 2017 with a yield of 6.3%? I sure wouldn’t.

How about a Fifth Third Bancorp (Nasdaq: FITB) 4.9% yield maturing in 2018? Thanks but no thanks.

A Key Corp. (NYSE: KEY) bond maturing in 2014 paying 5.6%? Ummm…No, I think I’ll pass.

If I’m not certain that a bond will be paid back, why would I want to own the stock? After all, the bond owners get paid before the stock owners.

It’s my contention some of the banks and brokers don’t even know what they own on their balance sheets. The mortgage products and derivatives were so complex that the average CEO can’t explain them.

And these guys aren’t dumb. They may have made some poor decisions, but stupid they ain’t.

We may get a lift for a while, but there’s going to be a lot more pain in the sector as companies are forced to continue write downs when they realize the value (or lack thereof) of the garbage on their balance sheets.

Zig When They Say Zag

Furthermore, the magazine cover indicator has been a fairly reliable predictor of stock movements. It was even proven by academics at the University of Richmond.

The professors examined headlines from three major business publications over twenty years and compared the stock performance to the bias in the headline.

The study concluded that positive stories were typically published after periods of strong out-performance and negative stories after underperformance. In other words, these stocks had already made their strong moves.

As their share prices declined, their dividend yields went in the opposite direction. That undoubtedly attracted investors who thought such high dividends would put a floor under how much share prices could drop. In the meantime, these investors could just sit tight and collect dividend checks earning them six, seven, or eight percent interest on their investment.

But it hasn’t turned out that way. Both the floor and yields proved ephemeral. Guess which of the companies in the one-month chart below have cut their dividends?

KeyCorp (KEY) (the dark green line) – 50 percent down in the last month – is one. Citibank (C) (the brown line) – 10 percent down – is another. Washington Mutual (WM) (the pink line) –35 percent down – is a third. And Fifth Third Bancorp (FITB) (the red line) – 50 down – is a fourth.

And all the others in the chart are on the chopping block for future possible cuts. Well, all except the Bank of Nova Scotia. The shares of this Canadian bank aren’t doing great, but it’s doing much better than most U.S. banks.

If you’re waiting for banks to bottom, you’re playing a dangerous game. Many are raising capital in expectation of future write-offs. The rapid rise of foreclosures is increasing banks’ bad debt. And, whenever the market falls precipitously, it’s usually led by financials. Banks are leading the market down … not showing it the way up.

If the worst is really behind banks (I can’t tell you how many times I’ve heard that), what’s coming up is pretty damn close. If I were you, I’d stay away.

Source: False Hope and False Bottoms Still Define Banks

It’s just the latest chapter in a continuing credit-crisis saga that’s gone on for so long that many investors have become numb to the news: They regard all new developments with a kind of “so what” attitude, or just ignore the news completely.

Believe me when I say that such a response is easy to understand. But hear me out as I underscore why investors must continue to watch this financial-services-sector saga closely. It’ll keep you out of trouble.

Let me explain …

The funds were invested the premiums from so-called “Bank Owned Life Insurance Vehicles,” or BOLIs, which are designed to pay off when key employees die.

BOLIs, in case you are not familiar with them, are specialized policies typically purchased as an employee benefit. Banks use them to fund such expected costs as employee compensation and the accompanying benefits. Like most life-insurance-type policies, BOLI policies contain both an investment feature and a death benefit.

And that’s why banks like them.

Not only does the bank accrue investment earnings revenue because they own the policies (bank-owned is the “BO” component of “BOLI”), the financial institution also receives the death benefit.

And since neither the death benefit nor the increase in the value of the investment vehicle is taxed, BOLIs became the mother of all tax shelters for banks.

And that brings us to the core problem.

You see, by taking the investment portion of the life insurance policies and moving them from traditional portfolio choices into more risky hedge funds, a bank, or in some cases the insurance company that sold the bank the BOLI policy, could increase its investment return with an almost-instantaneous, performance-enhancing boost that looked good to regulators and shareholders alike.

Of course, if you’re a baseball fan – as well as an investor – you know very well that there’s a downside to “performance-enhancing” boosts, even though the dramatic performance gains make that dark side very tough to resist.

That’s clearly why Fifth Third, Wachovia and a still-unnamed regional bank risked a reported $1.6 billion of their respective BOLI programs, an anonymous source close to the matter told MarketWatch.com. Many banks, presumably including these three, use BOLIs to offset the costs of their employee benefit programs.

And they’re not the only ones….

BOLIs have proven to be so popular that banks – always looking for additional ways to “rev up returns,” according to one news report – had more than $120 billion invested in them as of the end of last year.

But now the chickens are coming home to roost.

Fifth Third is suing Transamerica Life Insurance Co. – which sold it the policies – on the grounds that these investments in the Falcon fund were much more risky than the bank allegedly thought. Fifth Third also named Clark Consulting Corp. as a party in the lawsuit. Both Transamerica and Clark are subsidiaries of the Netherlands-based Aegon NV (ADR: AEG).

“As with many other credit-based investment products, the Falcon’s returns have been hurt by one of the most volatile periods for fixed income in recent memory,” said Citigroup spokeswoman Danielle Romero-Apsilos, Bloomberg News reported.

Filing a lawsuit is the Corporate America’s version of a high-school kid telling his teacher “the dog ate my homework.”

It seems to me that if you weren’t so greedy in the first place – and had simply stuck to your knitting with prudent, risk-averse choices that didn’t require all this creative accounting – you wouldn’t have had a care in the world when Citi’s Falcon Fund lost three-quarters of its value.

The bottom line: There could be an entirely new wave of write-downs encroaching onto financial-services firms’ corporate earnings reports in the next few quarters to come. And, as was the case with the initial part of the subprime-mortgage debacle, some investors are likely to be very surprised at the identities of the early casualties.

But other investors will continue to say “so what?”

Investors who continue to follow these developments will do so with the understanding that this, too, shall pass – and some pretty profit plays will ultimately start to show themselves.

We’ll be there to tell you when that happens.

And it’s likely to begin well before you’d expect it.

After all, as the old Wall Street adage says: “Buy when there’s blood in the streets.”

And if you’ve been listening to what we say, you’ll be able to say with confidence that none of that blood is yours.

Source: The Latest Banking Sector Credit Crisis Will Lead to That Sector’s Next Group of Profit Plays

Healthcare? It’s an excellent investment area during tough economic times, due to the essential nature of drugs and medicine that produces plenty of repeat business. But that’s not it either.

No… the answer is the financial sector. Large insider purchases have occurred at some of the following companies:

Wells Fargo (NYSE: WFC) *
Bank of America (NYSE: BAC) *
Wachovia Bank (NYSE: WB)
Fifth Third bank (Nasdaq: FITB)
American Express (NYSE: AXP)
Genworth Financial (NYSE: GNW)
Colonial National Bank (NYSE: CNB)

* Market Purchases by Existing Holders like Warren Buffett’s Berkshire Hathaway.

But for all the strong insider buying, financial shares have endured a beating.

What gives? Insider buying is one of the best market indicators. Always has been. But could all these insiders be wrong? And if they are, the question is: If the guys running these companies can be so wrong, what chance do ordinary investors have? After all, these are the people involved in the day-to-day operations and privy to details that will never be public. Are they just plain stupid? Let’s find out…

Short Versus Long

In the investment world, there are two types of investors:

Short-term: These guys look to be in and out of a stock in a matter of weeks, sometimes days. They’re looking for trading opportunities, not necessarily value.

Long-term: These investors look past the daily market noise and hype, focusing instead on the next 12-18 months for a return on their capital.

Insiders definitely tend to have a longer-term outlook. Insider buying is historically a very early indicator. For example, insiders cannot buy shares on Monday, knowing there will be good news on Friday, because they can’t trade on material information.

Instead, they buy shares on anticipation and optimism that their company is poised for future success. In addition, insiders can’t sell shares for a good length of time after buying them.

So when it comes to the current financial sector pain, the insiders who bought shares in their own companies are suffering just like regular investors.

However, here’s why you should pay attention to these trends…

Putting Their Money Where Their Mouths Are

More often than not, insider buying is a very accurate indicator – especially when a certain company’s insiders buy shares in a cluster pattern. They’re right more often than they’re wrong – and usually by a very wide margin.

You have to remember that insiders buy thousands of shares with several thousand, sometimes millions, of their own dollars. It’s not just a few hundred bucks here and there.

Ask yourself why anyone would bet the farm like this just to lose it. It may happen occasionally, but rarely when insiders buy with such gusto and such size. Such heavy buying usually signals some serious optimism.

And with the financial sector, there’s another factor at work…

A Unique Opportunity In A Mammoth Sector

In terms of financial sector shares, many insiders realize that that the current battering gives them a unique opportunity: To buy high quality stocks at very discounted levels.

This is a real “kitchen sink period” for financials – companies want to announce all their ugly losses to the market at once and get the pain over with quickly.

Financial stocks with heavy insider buying look extremely attractive now. They may look even more attractive next week. But I’d say that a year from now, they will look much less attractive from an investing standpoint.

So what’s the best way to follow the insiders?

The All-Important “Insider Window”

The key to following insider trades is timing.

If you’re looking to hop on the bandwagon with these astute folks (and remember, they know more about their companies than anyone else), you want to buy after the insiders buy.

That means you want to buy in a 3-6 month window after the insider buying has taken place. Why? Because insider buying as a forward-looking indicator is usually not confirmed by the market for a period of at least 6-9 months in the future.

You must be patient. Don’t fall into the trap that many ordinary investors do – that is, they do all the hard work by following the trends and buying shares, but then get antsy and sell at a loss within that 6-9 month period because “nothing” happened.

They then watch as the shares begin to move up in “miraculous” fashion.

But it’s not a miracle at all. It was the insider buying indicator working in time-tested fashion: Buy shares when they’re cheap and hold them until they are expensive.

Believe me, insiders also have an uncanny knack for selling at (or near) the top. Right now, they’re not selling in the financial sector; they’re buying like there is no tomorrow. We’ll check back at the end of the year to see if their strategy has worked or not. But you could do a lot worse than buying some financial sector shares now.

Talk to you again soon.

Karim

P.S. As Marc mentioned here on Tuesday, I’ll be part of a new Western Caribbean Investment Tour this June. While many investors continue to worry about the health of the US markets and look overseas in order to diversify, very few consider the Caribbean to be a hotbed of profitable opportunities.

But I’m personally inviting you to join me and my colleague Barbara Perriello, Director of Agora Travel, to a world of luxury that you need to see to believe.

We’ll be heading to the Bay Islands of Honduras from June 14-21 to explore the remarkable opportunities to grow your wealth, buy superb, cheap property, and protect your retirement funds outside the U.S. For example, some property bargains are one-third less than elsewhere in the Caribbean. What’s more, the country boasts a stable government that encourages foreign investment and English is the primary language.

A luxurious and cheap lifestyle… a Free Tourist Zone that eliminates sales tax and customs import duties and a 4% capital gains tax makes it excellent for land ownership and business ventures… reliable, professional medical care… retiree legislation that allows you to bring in your car and goods duty-free and receive your Social Security and pension income tax-free.

Come and join me. Get more details here: http://www.agoratravel.com/bayislands/mv. Or call Agora Travel at: 561-243-6276 / 800-926-6575.