EPS is over $.80, TARP is repaid, the div is only $.20 yielding less than 1%. Its time to raise the dividend. That would drive the stock price up - which creates currency to buy other banks in a stock-for-stock deal. Thoughts?
They mentioned that a quarter ago and JPM sounds ready. USB hedged a bit on capital requirements when last quarter they said they would look at it in the 4th quarter.
May not be until the 2nd or 3rd quarter now. I was fairly confident they would anounce it in December but it's all about capital still and I don't think you can have enough of it until the regulators and congress get done reinventing the wheel.
Part of it was to assure the preferred share holders. If you pay a common dividend you have to pay preferred first, including TARP.
So there were a lot of reasons they didn't push it to Zero.
Hmmm. This article and others reported that USB did repay the TARP, but (thanks to your post) I see other contradicting articles.
Looks like they have not repaid it yet.
It's interesting to read all the different thoughts on the dividends and their possible return, isn't it?
I will certainly ponder your thoughts about the non-payment of TARP money by some of the banks and that influence on dividend re-instatement.
I may be wrong, but wasn't USB's yield higher than that of JPM when it came to dividends? ( I know the amount they paid was larger.) I don't know how that fits in with the regional banks' dividends returning earlier than the big banks; on the other hand, you may be considering USB as one of the "big banks" when you talk about this.
I think when all banks payed dividend, not paying it was competitive disadvantage. When no bank pays dividend, than the field is level. When I think about it right now, I'm not sure JPM or WFC will raise dividend before Citi and BAC repay their TARP money. Regionals may actually be first to do that, since dividend cuts were not as severe as in national banks.
<<If he had a more sophisticated group of investors, if the bank was majority owned by Warren Buffett>>
Well, Buffett owns almost 4% - and institutions and mutual funds own 66% - more than BAC...so I don't think the dividend is in place simply to pacify the rabble.
I tend to agree that there are better things to do with earnings than paying out big dividends to shareholders...unless the cost of money to the bank gets cheap enough that they want to borrow - not the case at the moment.
I think that the dividend is not heading up any time soon as USB wants to conserve cash for potential acquisitions or expansions and also to keep their capital levels stable in the face of uncertainty.
You are welcome.
By the way, I took the time to look at your profile and see that you are from Natchez. What a lovely community you live in! I remember going through many of the wonderful old homes there and thought how beautiful they were. I still have pictures taken of me sitting on one of them, with the big white pillars in front. Was it Stanford Hall, or something like that? (That architectural style is one that my husband and I both admire, and our home looks much like that picture from years ago.)
I'm sure, with patience, we will see the dividend return. I bet that we all hear something by the end of this year about the possibility of the first (although maybe small) increase.
Good luck with your investing and have a great day!!
Thanks for this more-detailed explanation of the dividends--their cuts and their potential returns.
I had also made the observation (in my own mind) about the difference in the banks that dropped to one cent per quarter, vs. 5 cents per quarter.
And you are absolutely right about the mutual funds and pension plans not wanting to or not being able to hold onto non-dividend paying stocks. Many of them hold so many hundreds of thousands of shares that the market would have been swamped if they had suddenly been "forced" to dump all of their bank stocks. (I do wonder, however, how long they will continue to hold big blocks of these stocks if the dividends aren't increased at least slightly by next year. There are many stocks in today's marketplace that have not only continued to maintain their dividend; some have even increased them. I would imagine that the big holders like Vanguard and Fidelity, etc., have been in conversation with the bank CEO's and CFO's about this very topic!)
I agree totally that we will not see an immediate increase to the old levels. It would not surprise me if they took 5 years or more to raise dividends in small increments--just to be safe.
Unfortunately, the bank CEO's are not taking equal "hurt" in this process. The salaries and bonuses continue. I'm sure you saw the article posted recently on the high incomes of bank CEO's who took TARP monies.
I'd love to continue this conversation with you, but I just got home from a class (ironically entitled "The U. S. Economy after the Crisis,") and now I have to leave for a meeting.
Thanks again for your insights and details!