NEW YORK—U.S. bank investors likely will see a windfall in 2011 as the nation’s largest banks have secured approvals from the Federal Reserve to increase dividend payments as well as buy back stock to increase shareholder value.
A slew of the nation’s biggest lenders—including JPMorgan Chase & Co., Wells Fargo Co., and Goldman Sachs Group Inc.—announced that they would either increase quarterly dividend payouts, buy back stock, or both.
According to estimates compiled by Bloomberg, the total payouts may exceed $22 billion in total.
The blessing from the Fed is a signal that the central bank believes that the U.S. banking system is strong enough to return capital to shareholders.
The board of JPMorgan, the nation’s biggest bank, approved the dividend hike, increasing the bank’s quarterly dividend to $0.25 per share. It also will buy back $15 billion in shares.
“Our current expectation is to return to a payout ratio of approximately 30 percent of normalized earnings over time,” said JPMorgan CEO Jamie Dimon in a statement. “Beyond this, we intend to repurchase stock only when we are generating capital in excess of what we need to fund our organic growth, and when we think it provides excellent value to our existing shareholders.”
Investment bank Goldman Sachs intends to repurchase the 10 percent preferred shares it issued to Warren Buffett’s Berkshire Hathaway Inc. at the height of the financial crisis. “The redemption includes a one-time preferred dividend of approximately $1.64 billion, which will be reflected in the company’s first quarter results,” Goldman said in a statement.
San Francisco-based lender Wells Fargo announced a special $0.07 special dividend for the first quarter, increasing its first quarterly dividend to $0.12, factoring in its normal quarterly dividend rate of 5 cents.
In addition, its board approved repurchasing 200 million shares currently outstanding. Stock repurchases in the past typically have increased the value of current shareholders as it decreased dilution. “We have confidence in our capital plan, which recognizes the continued strength of our capital position and supports our goal of returning over time to a more normalized dividend payout ratio of 30 percent,” announced Wells Fargo CEO John Stumpf.
Other banks increasing their quarterly dividends include BB&T and U.S. Bancorp. Consumer lender American Express Co. also announced intentions of stock repurchase.
A slew of the nation’s biggest lenders—including JPMorgan Chase & Co., Wells Fargo Co., and Goldman Sachs Group Inc.—announced that they would either increase quarterly dividend payouts, buy back stock, or both.
According to estimates compiled by Bloomberg, the total payouts may exceed $22 billion in total.
The blessing from the Fed is a signal that the central bank believes that the U.S. banking system is strong enough to return capital to shareholders.
The board of JPMorgan, the nation’s biggest bank, approved the dividend hike, increasing the bank’s quarterly dividend to $0.25 per share. It also will buy back $15 billion in shares.
“Our current expectation is to return to a payout ratio of approximately 30 percent of normalized earnings over time,” said JPMorgan CEO Jamie Dimon in a statement. “Beyond this, we intend to repurchase stock only when we are generating capital in excess of what we need to fund our organic growth, and when we think it provides excellent value to our existing shareholders.”
Investment bank Goldman Sachs intends to repurchase the 10 percent preferred shares it issued to Warren Buffett’s Berkshire Hathaway Inc. at the height of the financial crisis. “The redemption includes a one-time preferred dividend of approximately $1.64 billion, which will be reflected in the company’s first quarter results,” Goldman said in a statement.
San Francisco-based lender Wells Fargo announced a special $0.07 special dividend for the first quarter, increasing its first quarterly dividend to $0.12, factoring in its normal quarterly dividend rate of 5 cents.
In addition, its board approved repurchasing 200 million shares currently outstanding. Stock repurchases in the past typically have increased the value of current shareholders as it decreased dilution. “We have confidence in our capital plan, which recognizes the continued strength of our capital position and supports our goal of returning over time to a more normalized dividend payout ratio of 30 percent,” announced Wells Fargo CEO John Stumpf.
Other banks increasing their quarterly dividends include BB&T and U.S. Bancorp. Consumer lender American Express Co. also announced intentions of stock repurchase.
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