Freed from COVID restrictions, big US banks hike dividends

Recently freed from regulators’ coronavirus restrictions, the l argest U. S. banks on Monday announced plans to return tens of bi l - l i ons of dollars to their shareholders over the next year i n the form of dividends and stock buybacks.

It’s a signal that banks are l ooking to reward their shareholders after l ast year’s pandemic- driven l osses. But i t’s also a sign banks at the moment see few places to put their big profits other than back into the hands of their shareholders.

In an attempt to ensure banks could hold up i n the face of a severe pandemici nduced recession, the Federal Reserve l ast year put i nto place restrictions on how much banks could pay i n dividends or spend on stock buybacks. Banks at the time were reporting tens of billions i n l osses as businesses were shuttered and Americans were thrown out of work.

But in l ast week’s “stress tests,” the Fed found that all of the nation’s big banks were healthy enough to withstand a sudden economic catastrophe and ended i ts restrictions on dividends and buybacks.

Morgan Stanley on Monday said i t would double i ts quarterly dividend, from 35 cents per share to 70 cents per share, with payouts expected to start i n the third quarter. The bank will also buy back $ 12 billion worth of i ts outstanding shares over the next year. For context, analysts surveyed by FactSet expect Morgan Stanley to make about $ 15.5 billion i n profits this year.

Wells Fargo i s also heavily upping i ts dividend, raising it f rom 10 cents per share to 20 cents a share. The bank plans to buy back $ 18 billion i n stock over the next year, i t said i n a statement. That buyback plan would also consume all of Wells Fargo’s forecasted profits, with analysts expecting the bank to earn around $ 15.7 billion this year, according to FactSet.

J PMorgan Chase said it planned to i ncrease i ts quarterly dividend to $1 per share, up from 90 cents. The bank said i t plans to continue i ts $ 30 billion stock buyback plan that was announced l ate l ast year. J PMorgan i s expected to post earnings of about $ 40 billion this year.

Other banks made similar announcements. Bank of America said it plans to raise its dividend by 17% to 21 cents per share, continui ng i ts $ 25 billion stock buyback. Truist, the bank that was made when BB& T and SunTrust merged, said i t planned to raise i ts dividend to 48 cents per share f rom 45 cents per share. Pennsylvania- based PNC, now one of the l argest banks i n the country after merging with BBVA, plans to up i ts dividend by 9% to $ 1.25 per share.