More money for bank shareholders. In a sign of confidence about their improved health, five of the largest U.S. banks are hiking their payouts – some of them significantly.
Morgan Stanley is making the most aggressive move. The investment bank said after the markets closed Monday that it will double its quarterly dividend to 70 cents a share in the third quarter. That’s much more than analysts had expected. It also said it’ll boost spending on its share buybacks.
The Wall Street Journal reports that collectively, the five banks are raising payouts by 40%.
The banks can make bigger payouts because the Federal Reserve just gave them a clean bill of health following their “stress tests” last week.
Goldman Sachs will boost its dividend by 60%; Bank of America by 17%, and JPMorgan Chase, 11%.
Wells Fargo, which is trying to come back from a series of costly scandals, is doubling its quarterly dividend to 20 cents. But that’s still 40% less than what it had paid out last year.
The lone holdout: Citigroup, which has to boost its capital ratio as a result of the stress test. It’ll keep its dividend steady at 51 cents a share but keep its options open for an increase.
Shares of Citi fell at the market open Tuesday, while the other banks rose. Financials were among the top early gainers on the S&P 500 and Dow.