M&T Bank (MTB) Announces 7% Dividend Hike: Time to Buy?

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As part of its 2017 capital plan (approved by the Federal Reserve), M&T Bank Corporation 's MTB board of directors announced a 7% hike in the company's quarterly common stock dividend. The revised quarterly dividend now comes in at 80 cents per share compared with the previous figure of 75 cents. This dividend will be paid on Jun 29 to shareholders of record as of Jun 1, 2018.

Since the financial crisis, M&T Bank has raised its dividend twice. From paying 70 cents a share as quarterly dividend during the financial crisis, the company has come a long way in displaying its capital strength. Prior to this hike, the company had raised its dividend by 7% (from 70 cents to 75 cents per share) in February 2017.

Considering Tuesday's closing price of $184.39 per share, the dividend yield is currently valued at 1.74%.

Alongside, the company has an impressive share-repurchase plan. The company's 2017 capital plan included share buyback of up to $900 million, over the four-quarter period, effective July 2017. Notably, the company recently announced an additional share-buyback plan of up to $745 million as well.

Investors interested in this Zacks Rank #2 (Buy) stock can have a look at the bank's fundamentals and growth opportunities.

Revenue Growth: M&T Bank continues to make steady progress toward bolstering its revenues. Since 2008, the company has recorded a consistent rise in net interest income. Over the last five years (ended 2017), it has grown at a compound annual growth rate (CAGR) of nearly 9%, with the trend continuing into first-quarter 2018 as well.

The company's projected sales growth (F1/F0) of 4.47% indicates constant upward momentum in revenues.

Earnings Per Share Strength: Earnings are anticipated to display an upswing in the near term, as the company's projected EPS growth (F1/F0) is 33.9% compared to the industry average rate of 30%. Also, M&T Bank recorded an average positive earnings surprise of 3.96%, over the trailing four quarters.

Inorganic Growth Routes: Given its robust liquidity position, M&T Bank is well positioned to grow on the back of acquisitions. The company's accomplishment of several major acquisitions in and out of the United States, in the last several years, indicates its impressive growth momentum. Completion of the merger with Hudson City in November 2015 expanded the company's retail branch network in the Eastern United States, with access to 135 Hudson branches, situated primarily in New Jersey. Further, product and balance-sheet diversification, stemming from the acquisition, will likely support the company's top line.

Strong Leverage: M&T Bank's debt/equity ratio is valued at 0.59 compared to the industry average of 0.92, indicating relatively lower debt burden. It highlights the financial stability of the company even in adverse economic conditions.

Impressive Price Performance: Shares of M&T Bank have jumped 15.3% in the last six months, outperforming the 9.5% gain of the industry .

Stocks to Consider

Northern Trust Corporation NTRS has been witnessing upward estimate revisions for the last 30 days. For the past six months, the company's share price has been up more than 15%. It currently carries a Zacks Rank of 2. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Comerica Incorporated CMA has been witnessing upward estimate revisions, for the last 30 days. Additionally, the stock climbed nearly 25.5%, over the past six months. It currently has a Zacks Rank #2.

State Street Corporation STT has been witnessing upward estimate revisions, for the last 30 days. Also, the company's shares have risen nearly 9.5%, in six months' time. It also holds a Zacks Rank of 2, at present.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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