Wall Street banking giant JPMorgan Chase (NYSE: JPM) has rebounded convincingly from its turmoil during the financial crisis, emerging as one of the strongest financial institutions in the business. The stock has climbed at an annual pace of more than 20% per year since 2009, culminating in a 55% leap over the past 12 months. Along the way, JPMorgan has restored and grown its dividend to the point that it now exceeds its pre-crisis levels, and investors hope that the Wall Street bank will reward shareholders yet again this year. Let's look more closely at whether JPMorgan Chase will raise its dividend in 2017.
JPMorgan's dividend increases have come as the banking giant has become more powerful and financially healthy than ever. The combination of retail and investment banking has been lucrative during the bull market in stocks and recovery in the housing market, and rising profits have helped to support the dividend.
Of course, dividends haven't been the only way that JPMorgan Chase has returned capital to shareholders in its history. Stock buybacks have also played a big role. For example, in 2011, JPMorgan also committed to repurchasing up to $15 billion in stock to go along with its dividend increase. Since then, the company has authorized similar buybacks and used them to repurchase shares on a regular basis.
Will JPMorgan raise its dividend in 2017?
CEO Jamie Dimon has said that he prefers dividends to buybacks and hopes that JPMorgan can push its payout ratio toward 50% of earnings in the future. As Dimon put it at a recent conference, "I think buying back stock is giving cash to my leaving shareholders. I care much more about the remaining shareholders. ... It might be better to give you a special dividend."
Investors do have to remember, though, that JPMorgan's freedom to structure its capital strategy is still limited. Many are hopeful that a new administration in Washington will find ways to make regulation less onerous, and that could potentially include the battery of stress tests that JPMorgan and its peers have to go through every year in order to have their capital plans approved. Until that happens, though, JPMorgan might have to wait longer than it otherwise would in order to fully restore its dividend to the level it would like.
Given the bank's recent success, investors should anticipate another dividend increase from JPMorgan Chase this year, likely coming near mid-year and probably adding another $0.04 to $0.05 per share to the quarterly payout. Moreover, if rising interest rates bring greater profits, then investors could enjoy accelerated share growth, both in 2017 and in years to come.
10 stocks we like better than JPMorgan Chase
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and JPMorgan Chase wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of January 4, 2017