Seeking Alpha

Markit expects major dividend hikes at BofA and Citi

  • Expecting dividends to grow 49% on average for the banks subject to the Fed's stress tests (about the same as last year), Markit, says Citigroup (C) and Bank of America (BAC) will lead the way with 400% boosts. "They are the last of the major banks paying minimal dividends ... change is overdue."
  • While 400% is a big number, Citi and BofA will continue to lag their peers in terms of yield (400% growth on a penny just leads to a nickel).
  • Also expected to have a significant pop is Morgan Stanley (MS) - a doubling of the payout to $0.10 per share and a 1.4% yield. Others in the top 5 in increases are Zions Bancorp (ZION) with a 75% boost to $0.07 and Regions Financial (RF) up 67% to $0.05.
  • The others: KEY +27%, HBAN +20%, BK +20%, STI +20%, COF +17%, DFS +15%, AXP +13%, STT +12%, JPM +11%, CMA +11%, PNC +9%, USB +9%, GS +9%, FITB +8%, WFC +7%, NTRS +6%, and no soup for BBT and MTB where the dividends are expected to be flat at $0.23 and $0.70 per share, respectively.
  • As for ETFs, the dividend jumps are expected to have the biggest impact on the XLF which would see a 25% increase in payout: The ETF has 81 companies, but the top 5 holdings - BofA, Wells, JPM, Citi, USB - make up 41% of assets. In contrast, just two CCAR banks make up the top five holdings of the KBE and it should see a more muted increase of just 18%.
  • Related ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, FXO, PFI, KBWB, RKH, QABA, FNCL, FINU, KRU, RWW, KBWR, RYF, PSCF, KRS, FINZ
Comments (13)
  • minecanary
    , contributor
    Comments (411) | Send Message
     
    What then goes without saying is that the bonus pools are jumping 800%
    20 Feb, 03:58 PM Reply Like
  • MisterJ
    , contributor
    Comments (580) | Send Message
     
    Where's my WFC in this??? No party for me ;-(
    20 Feb, 04:21 PM Reply Like
  • Hello Again 83
    , contributor
    Comments (428) | Send Message
     
    I think BAC will offer a dividend more like 8 to 10 cents per quarter. Investors have been way more than patient.
    20 Feb, 04:22 PM Reply Like
  • Joseph Poma
    , contributor
    Comments (437) | Send Message
     
    8 - 10 cents per QUARTER?! Sorry buddy, but I think you're dreaming, at least in the short term.
    24 Feb, 01:06 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8135) | Send Message
     
    The capital returns are going to be MASSIVE!
    20 Feb, 04:24 PM Reply Like
  • campito
    , contributor
    Comments (46) | Send Message
     
    In the case of BAC a 5 cents a quarter would mean a $2.2 bn a year dividend, leaving another $8bn a year for buybacks (assuming a $10bn return as per last year CCAR results)

     

    That would be a nice base scenario
    20 Feb, 04:45 PM Reply Like
  • Phr3d
    , contributor
    Comments (200) | Send Message
     
    WFC @ +7%?
    BS
    20 Feb, 06:42 PM Reply Like
  • u01bsb0
    , contributor
    Comments (616) | Send Message
     
    but wfc already gives around a 3% div. Whereas BAC gives 1 cent per share so even a 400% increase, which sounds huge, will still give a significantly smaller dividend than WFC % wise.
    20 Feb, 07:32 PM Reply Like
  • Phr3d
    , contributor
    Comments (200) | Send Message
     
    perhaps I misread - I see the statement as adding 7% to present amount, do you see it as total div = 7%, not that either make sense to me..
    $1.20 + 8.5ยข = below expectations IMHO.
    annual div of 7% would exceed historic, pre-nanny guvm't 'review'.
    20 Feb, 07:59 PM Reply Like
  • jimbreenjr
    , contributor
    Comments (7) | Send Message
     
    My hope is that STI would have an increase that would bring its dividend closer to $.15 per share.
    20 Feb, 09:08 PM Reply Like
  • jimbreenjr
    , contributor
    Comments (7) | Send Message
     
    My hope is that STI would have an increase that would bring its dividend closer to $.15 per share.
    20 Feb, 09:08 PM Reply Like
  • herschfields
    , contributor
    Comments (95) | Send Message
     
    A 400% increase is NOT respectful for what BAC has to offer within the Financial environment.
    21 Feb, 10:46 AM Reply Like
  • Ameno
    , contributor
    Comments (11) | Send Message
     
    Hoping for a big buyback from Citi.
    21 Feb, 09:44 PM Reply Like
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