Cathay General Bancorp: A Steady Dividend Beacon in Uncertain Times

In a market increasingly defined by volatility, investors crave predictability. Few companies deliver it as consistently as Cathay General Bancorp (CATY), which has maintained an unbroken $0.34-per-share quarterly dividend for over three years—a track record that underscores its financial discipline and shareholder-centric strategy. With robust capital ratios, active share repurchases, and a fortress balance sheet, Cathay positions itself as a recession-resistant income powerhouse, offering both stability and growth potential. Here’s why now is the time to act.

Dividend Discipline: A 3-Year Proven Record

Since early 2022, Cathay has paid a $0.34 quarterly dividend, amounting to an $1.36 annualized payout with a yield historically between 3.0% to 4.4%. This consistency is rare in the banking sector, where economic uncertainty often pressures dividend payouts. Key highlights include:
- 2022–2024: Consistent quarterly dividends, with no cuts or pauses, even as macroeconomic headwinds tested peers.
- 2025: The most recent dividend, paid in March 2025, maintained the $0.34/share rate, with the next payout expected in June 2025 (ex-dividend on Feb 27, 2025).

This reliability is underpinned by Cathay’s Asia-U.S. corridor focus, leveraging its 60+ branches in key markets like California and Texas to serve high-growth immigrant communities and small businesses. This niche positioning minimizes reliance on cyclical sectors, reinforcing earnings stability.

Capital Strength: A Fortress Balance Sheet

Cathay’s capital ratios—the bedrock of banking resilience—are among the strongest in the industry. As of March 31, 2025:
- Tier 1 risk-based capital ratio: 13.57% (vs. a regulatory minimum of 8%).
- Total risk-based capital ratio: 15.19% (vs. 10% minimum).
- Tier 1 leverage ratio: 11.06% (vs. 5% minimum).

These metrics place Cathay firmly in the “well capitalized” category under Basel III standards. The ratios have trended upward since 2023, reflecting disciplined risk management and organic capital growth.

This capital buffer insulates the bank from potential economic shocks, making it a recession-resistant play. Unlike speculative assets, Cathay’s stability is structural, not cyclical.

Share Repurchases: Fueling Value

Cathay isn’t just paying dividends—it’s returning capital aggressively. In 2022, the bank launched a $125M share repurchase program, and in 2024, it renewed this commitment, signaling confidence in its valuation. These buybacks:
- Reduce dilution: Strengthening earnings per share (EPS) over time.
- Demonstrate undervaluation: Management acts when shares are perceived as cheap, as they were in early 2024 when the stock traded at a 10% discount to book value.

Why Act Now?

Three factors create a compelling case to buy CATY ahead of the June 2025 dividend:

1. Undervalued Multiples:
   Cathay trades at just 1.0x book value, below its five-year average of 1.2x and well below peers like East West Bancorp (EWBC) (1.3x book). This discount persists despite its superior capital ratios and dividend consistency.

2. Recession Resilience:
   Its Asia-U.S. corridor focus targets non-cyclical demand—immigrant remittances, small-business lending, and cross-border trade—sectors less sensitive to economic downturns.

3. June 2025 Payout Catalyst:
   With the next dividend payment imminent, investors who own shares before the June 10, 2025, record date will capture the $0.34 payout. This creates a “buy-and-hold” incentive, as the yield (currently ~3.7%) offers a compelling entry point.

Final Take: A Rare Combination of Safety and Yield

Cathay General Bancorp is a contrarian’s dream—a bank with rock-solid capital, a proven dividend machine, and a valuation that hasn’t kept pace with its fundamentals. As the Fed pauses rate hikes and recession risks linger, investors should prioritize assets that deliver predictable cash flows and capital preservation. CATY checks both boxes.

Actionable Idea:
- Buy CATY shares ahead of the June 10 record date to secure the $0.34 dividend.
- Hold for the long term: Its 3-year dividend consistency and capital strength suggest this is a set-it-and-forget-it income play.

The market may overlook Cathay’s stability, but investors who act now will reap the rewards of a recession-resistant dividend champion.

Note: Always conduct your own research and consult a financial advisor before making investment decisions.