On Tuesday, Wells Fargo & Company ( WFC ) enhanced its
quarterly common stock dividend by 20% to 30 cents per share. The
dividend will be paid on Jun 1, 2013 to shareholders of record as
of May 10, 2013.FIFTH THIRD BK (FITB): Free Stock Analysis
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ReportSTATE ST CORP (STT): Free Stock Analysis ReportWELLS FARGO-NEW (WFC): Free Stock Analysis
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This marks Wells Fargo's 4th dividend increase since 2011,
reflecting its commitment to return value to shareholders with
strong cash generation capabilities. Prior to this, the company had
increased its dividend by 14% (from 22 cents to 25 cents per share)
in Jan 2013.
The dividend increase is part of Wells Fargo's 2013 Capital Plan.
The company's capital plan, which included dividend hike and other
capital actions, was submitted to the Federal Reserve in Jan 2013.
Following the approval of the plan, the company increased its
For Wells Fargo, its business model is quite impressive as it
allows the company to generate sufficient capital, strengthen its
balance sheet and help return capital to shareholders. Moreover, we
believe that strategic acquisitions will expand the company's
business and improve its profitability over time.
The company's diversified revenue stream, strong capital position
and expanded business through acquisitions, along with better
expense management and improved credit quality, will support its
profit figures. Yet, a sluggish economic recovery coupled with
regulatory issues might limit its growth to some extent.
In first-quarter 2013 the company paid roughly $1.3 billion in
dividends to the common shareholders. Moreover, it repurchased
common stock worth about $383 million during the quarter. Cash and
due from banks exiting the quarter were $16.2 billion.
Wells Fargo currently carries a Zacks Rank #3 (Hold). We believe
that the announcement of a dividend increase will augur well for
the company and help boost shareholders' confidence.
Other companies in the same sector worth considering include
Fifth Third Bancorp ( FITB ),
JPMorgan Chase & Co. ( JPM ) and State
Street Corporation ( STT ). All three
companies carry a Zacks Rank #2 (Buy).