The PNC Financial Services Group, Inc. (PNC) raised its quarterly common stock dividend by 9% to 48 cents per share on Thursday. The dividend will be paid on May 5 to shareholders of record as of Apr 15.
The latest hike marks PNC Financial’s 4th dividend increase since 2011, reflecting its commitment to enhance shareholder value with its cash strength. Prior to this, the company had increased its dividend by 10% (from 40 cents to 44 cents per share) in Jan 2013.
The latest dividend increase is part of PNC Financial’s 2014 Capital Plan. The company’s capital plan, which included dividend hike and other capital action, was submitted to the Federal Reserve in Jan 2014 and got approved.
PNC Financial has an impressive business model which enables it to strengthen its balance sheet and efficiently deploy capital. The company’s endeavors to realign its branch network in an economic manner, expense management initiatives, strong credit quality, diversified revenue mix and sturdy capital ratios should help it earn better going forward. However, tepid economic recovery, a low interest-rate environment and regulatory pressure could mar the company’s growth.
At present, PNC Financial carries a Zacks Rank #3 (Hold). We believe that announcement of the dividend hike will raise shareholders’ confidence.
Some better-ranked companies in the same sector include BankUnited, Inc. (BKU), Wells Fargo & Co. (WFC) and The Bank of New York Mellon Corp. (BK). While BankUnited and Wells Fargo have a Zacks Rank #2 (Buy), BNY Mellon has the same Zacks Rank as PNC Financial.