State Street Corporation
) joined rewarding shareholders through enhanced capital
deployment activities. Recently, the company announced an 8.3%
hike in its quarterly dividend.
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The Board of Directors at State Street declared a cash dividend
of 26 cents per share, up from 24 cents paid previously. The new
dividend is payable on Apr 12 to shareholders of record as of Apr
1. Last week, the company had also announced dividend of
$1,312.50 per share on its non-cumulative perpetual preferred
stock, Series C payable on Mar 15, to the shareholders of record
as of Feb 28.
In Mar 2012, following the release of the Federal Reserve's
stress test results, the company hiked its quarterly dividend by
33.3% to 24 cents per share.
The announcement of the dividend rise comes on the back of State
Street's strong capital position. As of Dec 30, 2012, its Tier 1
capital ratio was 19.1% and its leverage ratio was 7.1%. In
addition, the company's Tier 1 common ratio was 17.1% and its
Tangible common equity ratio was 7.2%.
As of Dec 31, 2012, estimated pro-forma Basel III tier 1 common
ratio was 10.8%, after considering the requirements of 3 Notices
of Proposed Rulemaking (NPRs) by the U.S. bank regulators. These
sturdy financial figures well support the company's decision to
hike its dividend.
Concurrently, another financial firm
T. Rowe Price Group, Inc
) Board of Directors approved a 12% hike in its quarterly common
stock dividend to 38 cents per share. The revised dividend will
be payable on Mar 27 to shareholders as of the close of business
on Mar 13.
Among other companies in the same sector, in Jan 2013,
Wells Fargo & Company
) enhanced its quarterly common stock dividend by 14% to 25 cents
per share, payable on Mar 1 to shareholders of record as of Feb
1, 2013. Further, in the same month,
) increased its quarterly common stock dividend by 13% to 17
cents per share. The dividend will be paid on Apr 1, to
shareholders of record as of Mar 15.
We believe that even after announcing a dividend hike, State
Street will be able to maintain its strong capital and balance
sheet levels. This would position the company comfortably for
expansion through acquisitions as well as grow organically.
State Street currently retains a Zacks Rank #2 (Buy).