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In an effort to share more profits with the shareholders, student lender SLM Corporation (SLM - Analyst Report) – commonly known as Sallie Mae – announced a 20% hike in its quarterly cash dividend to 15 cents per share. The newly increased dividend will be paid on Mar 15, 2013 to the shareholders of record at the close of business as of Mar 1.
Concurrently, the board of directors at Sallie Mae authorized a $400 million share repurchase program for its outstanding common shares. The program does not have any expiry date.
The dividend hike as well as the new share repurchase program is supported by Sallie Mae’s strong balance sheet along with its ability to generate significant cash flows. For the fourth quarter of 2012, the company reported earnings of 55 cents per share, a couple of cents ahead of the Zacks Consensus Estimate and 8% higher than the year-ago quarter. Results were boosted by higher debt repurchase gains. As of Dec 31, 2012, cash and investments stood at $5.0 billion compared with $3.9 billion as of Dec 31, 2011.
Also, during 2012, the company repurchased 58 million shares worth $900 million. 
The latest dividend hike reflects Sallie Mae’s commitment to provide value to its shareholders. Through this dividend payout, the company will also be able to attract investors, who are increasingly searching for high-quality dividend paying stocks in an effort to boost their income. This, in turn, will enhance investors’ confidence in the stock.
Sallie Mae currently retains a Zacks Rank #4 (Sell). Other banks that are performing well include BankUnited, Inc. (BKU - Analyst Report), Fifth Third Bancorp (FITB - Analyst Report) and Regions Financial Corp. (RF - Analyst Report). BankUnited carries a Zacks Rank #1 (Strong Buy) and the other two hold a Zacks Rank #2 (Buy).

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