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U.S. Banks: The Return of Dividend Increases and Share Repurchases
The U.S. banking sector got some good news as the Federal Reserve gave several of the industry's larger players the go-ahead to increase their dividends. This comes after the central bank performed `stress tests' on 19 of the country's biggest banks, which measured their ability to withstand different economic circumstances. This included a worst-case scenario, under which the jobless rate rises to 11% from its recent level of 8.9%. Although the official results were not disclosed, many of the banks under review promptly began announcing payout increases and share repurchase programs, no doubt after receiving the blessing of the Federal Reserve.
Financial services giant JPMorgan Chase (JPM - Free JPMorgan Stock Report) has raised its quarterly dividend from $0.05 a share to $0.25, starting with the April payout. The company also authorized a $15 billion stock-repurchase program. Wells Fargo (WFC), U.S. Bancorp (USB), and BB&T (BBT) joined the party, announcing quarterly dividend increases, special one-time payments, and share buybacks, as well.