COF Rallies On Dividend Cut

Shares of Capital One Financial Corporation (COF) are soaring by more than 8% on heavy volume today. The company slashed its quarterly dividend by 87% to 5 cents in a desperate attempt to preserve capital amid worsening economic conditions.

The Mclean, Virginia based company expects to save more than $500 million every year from the reduction. CEO Richard D. Fairbank said that this action will support capital levels in the current environment as well as enhance the company's ability to repay the U.S. Treasury Department's preferred stock investment.

Analysts have cut fiscal 2009 earnings estimates of this Zacks #4 Rank ("sell") stock by 38 cents over the past month, and by $3 over the past 60 days. Therefore, though COF is rallying today, risks remain.

Read the full analyst report on COF