Wells Fargo Raises Dividend; Stock Jumps 32%

Wells Fargo (WFC) announced a 10% increase in its third quarter dividend earlier today and the stock rocketed higher by nearly 33%.

 

The stars seemed to be aligned Wednesday morning for the market, as WFC announced the dividend increase and the SEC is taking a shot at naked short selling. Could it be that a large number of shorts were covering today in light of potential SEC action? Whatever the case, I will enjoy the move higher by most financial sector stocks today.

In Wells' case, the company is increasing its quarterly dividend to 34 cents per share versus 31 cents per share in the same quarter last year. The approximate payout ratio is 64% based on 2008 estimated earnings per share of $2.11. This compares to the 5-year average payout ratio of 45%. The company has an S&P Quality Ranking of A.

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