The mounting pressure to have banks reinstate or increase dividends in 2011 is growing, and Canaccord Genuity commented on the outlook for Citigroup (NYSE:C), JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), PNC Financial (NYSE:PNC), UBS (NYSE:UBS) and Wells Fargo (NYSE:WFC).
Canaccord said, "In an interview with CNBC on Tuesday afternoon, J.P. Morgan CEO Jamie Dimon stated that the company was ready to boost its dividend in Q2. In a separate speech at J.P. Morgan’s health-care conference in San Francisco, Dimon said he hoped to achieve a payout ratio of 35% of normalized earnings on the dividend, which is slightly higher than other executives have hinted, reported The Wall Street Journal. Before U.S. banks can raise dividends, they must receive approval from the Federal Reserve as part of their stress test. The banks, according to The Wall Street Journal, have submitted their stress test results, and await the results from the Fed in March. Goldman Sachs in its Q4 bank earnings preview commented that U.S. Bancorp, J.P. Morgan, PNC Financial, and Wells Fargo are expected to initiate or increase dividends shortly. For Bank of America and Citigroup, the ability for them to raise or re-instate dividends is uncertain. The Goldman analyst commented that the payout ratios for dividends are expected to be 20-25% of forward earnings, which implies yields of 2-3%. Some banks could also initiate share buyback programs, which Goldman estimates would put the effective capital deployment yield “closer to 4-5%."
JPMorgan was trading at $44.63, down $0.08, or 0.18 percent, as of 2:00 PM EST. Wells Fargo was at $32.03, up $0.02, or 0.06. Bank of America was trading at $14.86, down $0.13, or 0.87 percent. Citigroup was at $5.07, down $0.01, or 0.30 percent. PNC Financial was at $61.44, down $0.76, or 1.22 percent. UBS was trading at $17.36, up $0.08, or 0.49 percent.
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