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Discover wants to up dividend, repurchase shares

RIVERWOODS, Ill. (AP) -- Discover Financial Services said Thursday that it hopes to increase its quarterly dividend and buy back up to $1.6 billion of its shares.

The banking and payment services company, which issues its namesake credit card, announced its plans after passing the Federal Reserve's annual "stress test."

The Fed said Thursday that all but one of the nation's 30 largest banks are better able to withstand a severe U.S. recession and global downturn than at any time since the financial crisis. The annual checkup is designed to measure how well the industry would fare in another severe recession.

Discover said that it plans to increase its quarterly dividend from 20 to 24 cents per share and buy back up to $1.6 billion of its shares during the four quarters ending March 31, 2015. The company included these plans as part of its capital plan submitted to the Fed for review.

The Fed will announce next week whether it will approve plans by some of the banks to increase dividends or buy their own stock.