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Zions Bancorp.’s (ZION - Analyst Report) board of directors quadrupled its quarterly dividend on its outstanding common stock. The increased dividend stands at 4 cents per share, a staggering 300% hike from the previous dividend of 1 cent per share. The increased dividend will be paid on May 30, to shareholders of record as of May 23.

Concurrently, the board of directors also declared quarterly dividends on the company’s Series A, C, F and G perpetual preferred shares. The dividends on these shares will be paid on Jun 15 to shareholders of record as of Jun 1.

Zions’ massive dividend hike can be viewed as a strategy to boost investors’ value following the setback related to the Federal Reserve’s 2013 Capital Plan and Review (CapPR) in March. The Fed approved certain strategic actions of the company’s capital and Zions was required to re-submit an amended capital plan.

Even though the 2013 capital plan was consistent with Zions’ strategy to rationalize its balance sheet and reduce expenses, it did not seem explicitly attractive as it had hardly any scope for enhancing shareholder value.

Zions has been a consistent dividend paying stock over the years. But the latest financial crisis led to a severely truncated disbursement. In the mid-2008s, the company paid a dividend of 43 cents per share. However, barely 12 months later, it was chopped down to a penny. The company had maintained the same dividend since then.

Zions currently carries a Zacks Rank #3 (Hold). However, other banking stocks in the West that are performing better than Zion include BofI Holding, Inc. (BOFI - Snapshot Report), CU Bancorp (CUNB - Snapshot Report) and BBCN Bancorp, Inc. (BBCN - Snapshot Report). All these companies carry a Zacks Rank #2 (Buy).

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