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KeyCorp (KEY) Rewards Shareholders with 13% Dividend Hike
Last week, KeyCorp. (KEY - Free Report) raised its quarterly common stock dividend by 13% to 8.5 cents per share. The dividend will be paid on Jun 15, 2016, to shareholders of record as of May 31, 2016.
This marks KeyCorp’s 5th dividend increase since 2011, reflecting its commitment to return value to shareholders with strong cash generation capabilities. Prior to this, the company had increased its dividend by 15.4% (from 6.5 cents to 7.5 cents per share) in May 2015. The dividend increase was part of KeyCorp’s 2015 Capital Plan.
Apart from KeyCorp, recently, several other big banks including Comerica Inc. (CMA - Free Report) , BB&T Corp. and Wells Fargo & Co. (WFC - Free Report) raised their quarterly dividends, under their 2015 capital plan. These companies increased their dividends in the range of 1–5%.
Investors interested in this Zacks Rank #3 (Hold) stock can have a look at this banking giant’s fundamentals and growth prospects.
Expense Management: KeyCorp’s expense reduction program – Fit for Growth – continues to see success. As the company has been consistently streamlining operations, diversifying products and exiting unprofitable/non-core businesses, overall expenses (excluding merger charges) are expected to remain stable in the quarters ahead. Also, KeyCorp is focused on achieving its targeted cash efficiency ratio of less than 60%.
Price-to-Equity (P/E) Ratio: KeyCorp’s P/E ratio stands at 11.37 compared to the industry average of 12.50, indicating that the stock is underpriced.
Leverage: KeyCorp’s debt/equity ratio stands at 1.00 compared with the industry average of 0.94, indicating higher debt level relative to the industry.
Earnings per Share Strength: KeyCorp’s earnings per share have recorded a CAGR of 4.8% over the last five years (2011–2015). Earnings are expected to exhibit an upswing in the near term as the company’s projected EPS growth (F1/F0) is 2.07% compared to the industry average rate of 0.21%.
Share Price Movement: Year-to-date, KeyCorp’s share price has witnessed a downtrend, losing over 3%.
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