As a novice investor with a knack for dividend-paying stocks, dividend-related events are always something I tend to keep an eye on. That said, it is these types of events that have a tendency to influence my decision in terms of which stocks I should keep on my radar and which ones I should not. With that said, and in the wake of its latest dividend increase, I wanted to highlight several reasons why I've chosen to stay bullish on shares of U.S. Bancorp (NYSE:USB).
A Brief Summary of the Company:
Headquartered in Minneapolis, US Bancorp a financial services holding company, providing a wide range of financial services in the United States. Its services include lending and depository services, cash management solutions, capital market analysis, and trust and investment management services, as well as merchant and ATM processing, mortgage banking, and brokerage services.
Recent Dividend Behavior:
On Tuesday, June 17, US Bancorp announced a quarterly dividend increase of $0.015/share, which brings its upcoming dividend payout to $0.245/share. It should be noted that the increase will be paid on July 15 for shareholders on record as of June 30. This boost represents a 6.52% increase from its prior dividend of $0.23/share, which was paid to shareholders on April 15. It should be noted that this increase comes as the direct result of the Federal Reserve's acceptance of US Bancorp's most recent Comprehensive Capital Analysis & Review, (which is known in most banking circles as the CCAR).
The Federal Reserves CCAR disclosure included its estimate of U.S. Bancorps minimum capital ratios for the period from the fourth quarter of 2013 through the fourth quarter of 2015 under the Supervisory Severely Adverse Scenario and the Supervisory Adverse Scenario, including the dividends and buybacks proposed by the Company under the more likely base case scenario.
Upcoming Earnings Outlook:
When it comes to the company's upcoming earnings, there are a number of things potential investors should consider. For example, analysts are currently calling for USB to earn $0.77/share in terms of EPS for its Q2 earnings that are due out on July 16 (which is $0.04/share higher than what the company had reported during Q1 2014, and $0.04/share higher than the company had reported during the year-ago period).
In order to meet and/or exceed its quarterly EPS estimates, I'd like to see an increase in the company's net income (within the range of at least 2.25%+ on the low side and 3.0%+ or more on the high side), a fair increase in the company's average total loan growth (within the range of 3.5% on the low side and 8.0% or more on the high side), and lastly, an increase in the company's average commercial loan growth (in this instance, I'm looking for at least a 4.5% on the low side and a 7.5% or more increase on the high side). If the above mentioned criteria are met and or exceeded, there's a very good chance that current EPS estimates could be surpassed.
For those of you who may be considering a position in the US Bancorp, I strongly recommend keeping a close eye on the company's recent trend performance which has demonstrated a solid uptrend over the last 200 days, its ability to continue to maintain its dividend, and its ability to continue to enhance shareholder value through dividend increases and share buybacks over the next 12-24 months, as each of these factors could play a role in the company's long-term growth.
Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in USB over the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.