Head to Head Review: Independent Bank (NASDAQ:IBCP) vs. Dime Community Bancshares (NASDAQ:DCOM)

Independent Bank (NASDAQ:IBCP) and Dime Community Bancshares (NASDAQ:DCOM) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, analyst recommendations, valuation, profitability, earnings and risk.

Dividends

Independent Bank pays an annual dividend of $1.12 per share and has a dividend yield of 3.1%. Dime Community Bancshares pays an annual dividend of $1.00 per share and has a dividend yield of 2.4%. Independent Bank pays out 32.9% of its earnings in the form of a dividend. Dime Community Bancshares pays out 32.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Independent Bank has increased its dividend for 11 consecutive years and Dime Community Bancshares has increased its dividend for 2 consecutive years. Independent Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings and price targets for Independent Bank and Dime Community Bancshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Independent Bank	0	2	3	0	2.60
Dime Community Bancshares	0	2	4	0	2.67

Independent Bank currently has a consensus target price of $41.00, suggesting a potential upside of 12.05%. Dime Community Bancshares has a consensus target price of $45.50, suggesting a potential upside of 8.09%. Given Independent Bank’s higher probable upside, analysts clearly believe Independent Bank is more favorable than Dime Community Bancshares.

Profitability

This table compares Independent Bank and Dime Community Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Independent Bank	21.63%	14.14%	1.30%
Dime Community Bancshares	15.15%	9.12%	0.83%

Insider and Institutional Ownership

79.4% of Independent Bank shares are held by institutional investors. Comparatively, 75.3% of Dime Community Bancshares shares are held by institutional investors. 5.9% of Independent Bank shares are held by insiders. Comparatively, 7.4% of Dime Community Bancshares shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Independent Bank and Dime Community Bancshares”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Independent Bank	$243.00 million	3.32	$68.54 million	$3.40	10.76
Dime Community Bancshares	$509.18 million	3.62	$110.68 million	$3.08	13.67

Dime Community Bancshares has higher revenue and earnings than Independent Bank. Independent Bank is trading at a lower price-to-earnings ratio than Dime Community Bancshares, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Independent Bank has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500. Comparatively, Dime Community Bancshares has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500.

Summary

Dime Community Bancshares beats Independent Bank on 9 of the 17 factors compared between the two stocks.

About Independent Bank

Independent Bank Corporation is a bank holding company that provides financial services through its subsidiary, Independent Bank. The company serves individuals, families and businesses, primarily in Michigan. Its offerings include personal and business checking and savings accounts, consumer and commercial lending, mortgage services, and digital banking. Business customers can also access services such as cash management and other treasury solutions. Independent Bank operates as a community-focused bank, combining branch-based service with online and mobile banking.

About Dime Community Bancshares

Dime Community Bancshares, Inc. is the bank holding company for Dime Community Bank, a community bank headquartered in Hauppauge, New York. The bank offers deposit accounts and lending services to individuals, businesses and organizations. Its lending activities include commercial real estate, multifamily, commercial business, residential mortgage and consumer loans. The bank also provides cash management and other banking services to business customers. Dime traces its roots to the Dime Savings Bank of Williamsburgh, founded in Brooklyn in 1864.