US banks plan big dividend hikes in 2021

Investors in bank stocks had a very good day yesterday, as a handful of major US banks announced a significant increase in dividends immediately after the results of the stress tests were announced. The interesting thing is that all banks last increased the dividend in 2019, before COVID-19.

On Twitter, the announcements trickled in quickly, with Morgan Stanley (MS) being the first to announce that it wanted to double the dividend. Morgan Stanley increased its dividend by 16.7% to $0.35 per quarter in 2019 and now wants to double that dividend to $0.70 per quarter. Morgan Stanley last cut its dividend by -81.5% in 2009 during the financial crisis.

Other banks that promised dividend increases to investors included Bank of America, Truist Financial, State Street, Goldman Sachs and U.S. Bancorp.

PLANNED BANK STOCK DIVIDEND HIKES

  • Wells Fargo (WFC): +100%
  • BNY Mellon (BK): +9.7%
  • JPMorgan Chase (JPM): +11.1%
  • Citigroup (C): no dividend hike planned
  • U.S. Bancorp (USB): +9.5%
  • Goldman Sachs (GS): +60%
  • State Street (STT): +9.6%
  • Truist Financial (TFC): +7%
  • Bank of America (BAC): +17%
  • Morgan Stanley (MS): +100%

Bank of America commented on the stress test results by announcing the plan to announce a 17 percent dividend hike later this year. “In April, we announced a plan to repurchase up to $25 billion of common stock over time, and today we are also announcing that we expect to increase the quarterly common stock dividend by 17 percent to $0.21 per share, beginning in the third quarter of 2021.”

Truist Financial Corporation announced a planned dividend increase of 7 percent and State Street Corporation plans a dividend hike of 9.6 percent. The Goldman Sachs Group stated that it intends to hike its dividend by 60 percent and U.S. Bancorp recommends a 9.5 percent dividend hike in 2021. JPMorgan Chase announced that it intends to raise the dividend by 11.1 percent and BNY Mellon plans 9.7 percent dividend hike. Last but not least: Wells Fargo also plans to double its dividend, following the 100 percent increase of Morgan Stanley. The difference however is that Wells Fargo announced a dividend cut of 80.4 percent last year.

Another stock that was actually missing from the good news show of banking stocks yesterday is Citigroup. Citi said that it expects to continue with its planned quarterly common dividend of at least 51 cents per share, paid since August 2019. This makes Citigroup the only really major bank not to raise its dividend this week.

All of the above stocks have yet to officially announce the dividend, which will normally happen within a few weeks or months. Of course you can read that directly on dividendhike.com.

Dividend Calendar

Look at the complete list of upcoming events
Ex-date Ticker Yield YTD hike
Oct 28 AOS 1.7% 7.7%
Oct 28 ZTS 0.5% 0.0%
Oct 28 COST 0.7% 12.9%
Oct 28 CARR 0.9% 0.0%
Oct 28 UNM 4.4% 5.3%
Oct 28 INFO 0.6% 17.6%
Oct 28 MS 2.8% 100.0%
Oct 28 NI 3.6% 4.8%
Oct 29 TXN 2.4% 12.7%
Oct 29 NRG 3.2% 8.3%