According to its capital plan under the 2012 Comprehensive
Capital Analysis & Review (CCAR),
Fifth Third Bancorp
) increased its dividend by 10% to 11 cents. The increased
dividend will be paid on Apr 18, 2013 to shareholders of record
as of Mar 29.
Further, following the approval of its capital plan under the
2013 CCAR, the company has proposed another dividend hike of 9%
to 12 cents per share, which is subject to the approval of the
board of directors. The increase may take place anytime between
the second quarter of 2013 and the first quarter of 2014.
The company also announced a new share repurchase authorization
of up to 100 million shares, replacing the previous authorization
in 2012. The previous authorization had roughly 54 million shares
Fifth Third's capital plan for 2013 included potential share
repurchases worth up to $984 million through the first quarter of
2014, along with additional incremental repurchases with any
after-tax gains from the sale of
The approval for the dividend hike justifies Fifth Third's
capital strength and will enhance investors' confidence in the
stock. This move represents fourth dividend increase post the
dividend cuts made by Fifth Third during the financial crisis.
The company had drastically slashed its dividend to 15 cents per
share from 44 cents in June 2008 and further lowered it to a
penny in December that year.
However, in March last year, the company raised it to 6 cents
and again advanced it to 8 cents in September. Later, in October,
the company upped it to 10 cents.
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Going forward, Fifth Third remains well positioned to benefit
from a recovering economy due to a diversified traditional
banking platform. Its diverse revenue mix, improved credit
quality and strong capital position serve as positive catalyst
for the stock. However, the sluggish macro environment and
stringent regulations are causes of concern.
Fifth Third currently carries a Zacks Rank #2 (Buy). Other
banking stocks that are performing better than Fifth Third
Meta Financial Group, Inc.
Flagstar Bancorp Inc.
). Both the stocks carry a Zacks Rank #1 (Strong Buy).