US lenders up dividends following Fed “stress test”
Morgan Stanley, JPMorgan, Bank of America, Goldman Sachs, and Wells Fargo stated on Monday that they were increasing their capital payouts after the US Federal Reserve gave them a clean bill of health following the financial services firms’ “stress tests” last week.
Morgan Stanley surprised investors with its pronouncement of doubling its dividend to 70 cents a share in the third quarter of 2021.
It further stated it would increase spending on share repurchases. The firm’s shares went up as much as 3.7% in after-market trading following the statement.
Bank of America Corp announced it would up its dividend by 17% to 21 cents a share starting this year’s third quarter, while JPMorgan Chase & Co said it will climb to $1.00 a share from 90 cents for the third quarter.
Goldman Sachs Group announced its plans to increase its common stock dividend to $2 per share from $1.25.
Wells Fargo & Co unveiled its plans to repurchase $18 billion of stock over the four quarters, starting September. The lender also stated it was doubling its quarterly dividend to 20 cents a share, confirming analyst expectations.
Citigroup also reaffirmed analysts’ estimates that a key part of its required capital ratios increased under the stress test results to 3.0% from 2.5%.
The Fed stated on Thursday that it was ending remaining curbs on dividend payouts when it found out that the country’s premier banks would remain well capitalized in its latest stress tests.