Fifth Third Bancorp
) announced a 9% hike in its quarterly dividend. This is in line
with the company's 2013 capital plan which was approved by the
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With this hike, Fifth Third's quarterly dividend figure reached
to 12 cents. The dividend will be paid on Jul 18, 2013 to
shareholders of record as on Jun 28, 2013. The company had also
increased its dividend by 10% to 11 cents in the last quarter as
The dividend hikes evince the company's healthy capital position.
At the end of the first quarter, Fifth Third's Tier I common
equity ratio improved 19 basis points (bps) sequentially to
9.70%. Tier I capital ratio increased 18 bps sequentially to
Fifth Third's earnings power has been helping it strengthen its
capital position. The company has delivered positive earnings
surprises in the last 4 quarters. With an expected earnings
growth rate of 9.2%, the company is expected to continue
returning capital to its shareholders.
Fifth Third's 2013 capital plan also includes redemption of trust
preferred securities (TruPS) worth $750.0 million and share
repurchases worth $984 million. The repurchase will include
shares worth $550.0 million issued as a result of Series G
preferred stock conversion. Further the company also intends
additional share repurchases with the after-tax proceeds from
sale of its stake in Vantiv, Inc.
Dividend Hikes by Other Banks
Similar to Fifth Third, other banks that increased their
dividends following the Fed's approval include
) - 18% to 23 cents,
) -300% to 4 cents and
) - 10% to 5.5 cents.
Diversified footprints of Fifth Third enable it to utilize the
benefits from the recovering economy. Additionally, the company's
improving credit quality, rising loans and deposits, as well as
stable balance sheet reflects its growth prospects.
Fifth Third's efforts to enhance shareholder value thorough
dividend and share repurchase activities make it an attractive
pick for yield-seeking investors.
Currently, Fifth Third carries a Zacks Rank #3 (Hold).