JPMorgan (JPM) Cheers Shareholders With 43% Dividend Hike


Date: 15.03.2019


JPMorgan’s (JPM - Free Report) board of directors has announced a 42.9% hike in its quarterly dividend. The revised dividend of 80 cents per share will be paid on Oct 31 to shareholders of record as of Oct 5. Based on the last day’s closing price of $114.30 per share, the dividend yield is 2.8%.

The hike comes as part of the company’s 2018 capital plan which was approved by the Federal Reserve this June. Additionally, JPMorgan’s capital plan includes authorization to repurchase $20.7 billion worth of shares, through the second quarter of 2019.

Since 2011, JPMorgan has been raising its dividend annually. From paying 5 cents a share as quarterly dividend during the financial crisis, the company has come a long way in terms of its capital strength. Prior to this hike, it had raised its dividend by 12% to 56 cents per share in September 2017.

Notably, JPMorgan’s shares have gained 20.8% in the past year, outperforming the industry’s growth of 8.7%.

Other than JPMorgan, several other major banks, including M&T Bank Corporation (MTB - Free Report) , SunTrust Banks, Inc. (STI - Free Report) and The PNC Financial Services Group, Inc (PNC - Free Report) , have increased their quarterly dividends (as part of their 2018 capital plan) in the range of 20-30%.

Investors interested in this Zacks Rank #3 (Hold) stock can have a look at the bank’s fundamentals and growth opportunities. 

Revenue Growth: JPMorgan seems well poised to improve its top-line growth. Its total revenues have displayed steady growth, driven by increase in net interest income (NII), which witnessed a compound annual growth rate of 7.3% over the last three years (2015-2017). Interest rate hike and steady loan growth continue to support the company’s NII growth.

However, mortgage fees and related income declined during the same period. Despite this, the company’s projected sales growth of 11.5% for the current year (compared with the industry average of 5%) indicates constant upward momentum in revenues.

Earnings Strength: JPMorgan witnessed earnings growth of 6.6% over the last three-five years. Furthermore, earnings are anticipated to display an upswing with the company’s projected earnings growth of 33.3% for 2018.
In addition, the company’s long-term (five years) estimated earnings growth rate of 6.7% promises rewards for investors over the long run. Additionally, JPMorgan recorded an average positive earnings surprise of 4.2% over the trailing four quarters.

Superior Return on Equity (ROE): JPMorgan’s ROE of 13.18%, as compared with the industry average of 11.60%, highlights the company’s commendable position over its peers.

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