Why Regions Financial’s Dividend Raise Signals Confidence That KeyCorp’s Frozen Payout Cannot Match
Regions just raised its dividend while KeyCorp has held its payout frozen for nearly three years, but the real story is what each bank's balance sheet reveals about which payment is actually safe for retirees counting on that income.
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Regions Financial (NYSE:RF | RF Price Prediction) and KeyCorp (NYSE:KEY) reported second-quarter results in July. Regions raised its dividend by 13%, while KeyCorp held at $0.205. For retirees, the question is which balance sheet can support those payments.
Regions Pays More and Keeps Raising It
The new $0.30 quarterly payout gives Regions a forward yield of about 4.4% versus KeyCorp’s 4.1%. Regions has grown its dividend at a 16% compound annual rate over 10 years. KeyCorp has paid the same amount since November 2022. On earnings coverage, payouts take about 49% and 48% of trailing earnings.
| Dividend Lens | Regions | KeyCorp |
|---|---|---|
| Quarterly Dividend | $0.30 | $0.205 |
| Latest Net Interest Margin (NIM) | 3.67% (Q1) | 2.89% |
| Net Charge-Offs | 42 bps, falling | 42 bps, rising |
| Nonperforming Loans | 0.67% | 0.73% |
Capital and Deposits Decide Whether Checks Keep Coming
Regulators set minimum capital levels. Credit losses or deposit outflows erode capital, and dividends get pressured first. KeyCorp cut its payout from $0.375 to $0.1875 in 2008.
Regions ended the quarter with a CET1 ratio (core capital as a share of risk-weighted assets) of 10.7%, and its Fed stress test coverage ratio of 101.4% ranked second highest among its peers. It generates 45 to 50 basis points of capital per quarter, and the new dividend uses about 20 basis points. Interest-bearing deposit costs of 1.72% lead its peers, which points to a loyal, low-cost depositor base. Management said clearly: “Our business model is not built around using high-cost deposits as a funding source.”
Rate Cuts Help KeyCorp, but Credit Is Slipping
KeyCorp guides to 9-11% net interest income (NII) growth and a NIM of 3.25%+ by 4Q27, passing about 56% of rate cuts to depositors. Regions expects only 2.5-4% NII growth from a wider margin. KeyCorp’s concern: nonperforming assets rose to $818M from $692M in one quarter.
Commercial real estate is the risk to watch at both banks. Regions’ office loans carry a 10.8% nonperforming ratio, so that book is under real pressure. We do not have comparable CRE exposure figures for KeyCorp, so I would treat its book as a factor to watch.
Regions Leads the Retirement Income Comparison
Regions leads this comparison on both current income and dividend growth. It pays the higher yield, has the better record of raises, carries more capital headroom and has improving credit. KeyCorp’s case rests on an earnings turnaround tied to its 15%+ return on tangible common equity (ROTCE) target, with a flat dividend in the meantime (the kind of frozen payout that often comes before a cut, which is exactly the pattern we broke down in a free dividend trap guide).
Two things would change my view. Regions’ office losses would have to spread into its wider loan book. KeyCorp would have to raise its dividend while bringing nonperforming assets back down.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
