Following the conditional approval its capital plan in Mar
2013 by the Federal Reserve,
JPMorgan Chase & Co.
) announced a 26.7% hike in its quarterly dividend. This pegged
the company's quarterly dividend at its highest level.
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JPMorgan declared a quarterly cash dividend of 38 cents per
share. The dividend will be paid on Jul 31 to shareholders of
record as of Jul 5.
The company used to pay this dividend amount prior to the
economic crisis. However, with the financial meltdown, JPMorgan
had reduced its quarterly dividend to 5 cents per share in
second-quarter 2009 and had taken bailout money from the
government to stabilize its financials.
However, following the approval of its capital plan by the Fed in
2011, JPMorgan raised its quarterly dividend five fold to 20
cents per share. Further, last year, it hiked its dividend 50% to
30 cents and maintained the same till first-quarter 2013.
In addition, JPMorgan's 2013 capital plan includes a share
repurchase program worth $6 billion, 60% lower than that of the
last year. The company intends to complete the buyback of shares
by the end of first-quarter 2014, through either the open market
or privately-negotiated transactions.
Apart from JPMorgan, other banks that increased their dividends
after the Fed's sanction include
SunTrust Banks, Inc.
Capital One Financial Corporation
). Capital One hiked its dividend by 500% to 30 cents per share,
SunTrust by 100% to 10 cents and Zions by 300% to 4 cents.
We believe that the latest jump in JPMorgan's dividend reflects
its commitment to return value to shareholders through its strong
cash generation capabilities. With the company clearing the
stress test and announcing new capital deployment plans, it will
expectedly be able to withstand another financial crisis and
continue to boost shareholders' value.
Currently, JPMorgan carries a Zacks Rank #2 (Buy).