Wall Street is optimistic that dividends from high-yielding banks won't be reduced.

Forget about certificates of deposit or Treasury bills.

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Just take a look at the substantial dividend rates that regional banks are currently offering in the wake of the March financial crisis brought on by Silicon Valley Bank, Signature Bank, and Silvergate Capital's bankruptcy.

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As of Tuesday's market close, KeyCorp, a Cleveland-based bank with a $11 billion market size, had a 6.4% yield. While Minneapolis' U.S. Bancorp ($53 billion) pays 5.1% on its ordinary shares, Atlanta's Truist Financial ($41 billion) currently yields 6.2%.

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The list is endless. The annual equivalent payout from Comerica of Dallas is 5.8%. Huntington Bancshares, based on Columbus, Ohio, wires money to investors' accounts or issues checks totaling 5.5%. Fifth Third Bancorp, based in Cincinnati, pays 4.8%.

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Will dividends be reduced? May some be completely skipped over? Since so many mother investors rely on dividend payments, good dividend yields are frequently a symptom of business or financial trouble or a warning sign that the payments are unsustainable.

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That is what occurred in the course of the 2008–2009 Global Financial Crisis, when bank after bank either passed the dividend or reduced it to a pitiful cent per share. Just last week, the troubled First Republic Bank ceased its operations due to the reported outflow of $70 billion in deposits.

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This time, no

not this time though. Wall Street just does not believe that most payouts will be reduced, provided that any recession this year is only slight.

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Why is the Street being so upbeat? because credit events had a major role in prior banking crises. Bear Stearns was destroyed in 2008 by towers of home loan securities, and Lehman Brothers collapsed as a result of substantial holdings in subprime mortgages.

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Due to inadequate supervision, poor investments in commercial property and junk bonds, as well as some fraud, more than 1,000 savings and loan institutions failed years ago. Loans made to the oil industry by Continental Illinois National Bank and Trust in the 1980s went sour, giving rise to the phrase "too big to fail."

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Instead, the fastest rate of interest rate rise in two generations is the current difficulty facing banks. Banks that hold 2%-yielding Treasury bonds or 4%-yielding mortgages suddenly find yourself in a higher-rate market, and the value of such securities has dropped.

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According to RBC Capital bank analyst Gerard Cassidy, "Unlike [2008-2009] or even 1990, those were credit debacles that rocked the banks, forcing them to cut and abolish dividends, pull back on buybacks," on Trade Algo. There is an issue with interest rates, because in this setting, "banks know that even if they sustain dividend payments through the subsequent cycle, which may be the one we're in at the moment, they will rerate after the cycle finishes." Thus, I believe that cutting dividends is the last thing they should do. In contrast to 2007, they also have robust capital levels and among the highest levels of liquidity.

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In order to put expectations in perspective, Trade Algo performed a screen on the securities in the Invesco KBW Bank ETF (KBWB), ranking them according to their lowest dividend payout ratios, which calculate payouts as a percentage of net income. Along with the yields, we also considered the percent of sell-side analysts who rate the bank as a buy, the potential gain if the company reached the average analyst's share price objective, and the yields themselves.