Now that banks have cleared the Federal Reserve’s stress tests, investors will be focused on which banks announce dividend increases Friday.
Candidates for dividend hikes include
Bank of America
(ticker: BAC),
Bank of New York Mellon
(BK),
Goldman Sachs Group
(GS),
JPMorgan Chase
(JPM),
Morgan Stanley
(MS), and
Wells Fargo
(WFC), according to a recent research note from Barclays banking analyst Jason Goldberg.
Dividend actions and announcements related to stock buybacks are expected after the close of trading Friday. The Fed wants banks to wait two days after the stress tests to unveil capital plans.
Industry leader JPMorgan is due for a dividend increase, having kept its quarterly payout at $1 a share since late 2021. Goldberg sees an increase of a nickel in the JPMorgan payout to $1.05 a share. Here are other potential quarterly dividend boosts that Goldberg is anticipating: Bank of America, 24 cents up from 22 cents; Bank of New York, 40 cents versus 37 cents; Goldman Sachs, $2.75 versus $2.50; Morgan Stanley, 82 cents up from 77.5 cents; and Wells Fargo, 34 cents from 30 cents.
Citigroup
(C), as noted Wednesday in a Barron’s article, isn’t expected to boost its 51-cent quarterly payout partly because the bank already has one of the highest yields among peers at 4.4%. It may continue to focus on stock buybacks.
JP Morgan would yield 3% if its dividend goes to $1.05 per share while Morgan Stanley would yield 3.9% at an 82-cent payout. Bank of America would yield 3.3% at a 24-cent payout and Goldman would yield 3.4% if its dividend rises to $2.75 per quarter.
Bank stocks, which have lagged the broad market rally lately and have been among the worst major sectors of the stock market this year, are getting a nice lift Thursday in the wake of the stress-test results.
The
SPDR S&P Bank
ETF is up 1.8% at $36.20. JPMorgan stock is up 1.8% at $141; Morgan Stanley stock is 1.3% higher at $85; Goldman Sachs stock has gained 2.6% to $322; and Bank of America stock is up 2.8% at $28.85.
In the immediate wake of the 2022 stress tests last June, Bank of America, Goldman Sachs, Wells Fargo, and Morgan Stanley were among the banks that announced dividend boosts. Investors are hoping for a similar scenario this year.
Write to Andrew Bary at [email protected]
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