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PNC Financial (PNC) Announces Dividend Hike: Is it Sustainable?
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The PNC Financial Services Group’s (PNC - Free Report) board of directors has declared a quarterly cash dividend on the common stock of $1.25 per share, indicating an increase of 10 cents per share or 9% from the second-quarter dividend of $1.15 per share. It will be paid out on Aug 5 to shareholders of record as of Jul 16, 2021.
Based on the increased rate, the annual dividend comes to $5 a share, resulting in an annualized yield of 2.6%, considering PNC Financial’s closing price of $191.74 on Jul 1.
Earlier this week, the companyannounced that its stress capital buffer (“SCB”) requirement will be 2.5%, beginning fourth-quarter 2021, for a four-quarter period. It also announced its intention to reinstate share repurchase programs with buybacks of up to $2.9 billion for the four-quarter period beginning in the third quarter of 2021.
This follows the Federal Reserve’s stress test results last week, in which all 23 participating banks passed. Subsequently, a plethora of banks cheered investors by announcing impressive capital deployment plans. Notably, Morgan Stanley (MS - Free Report) announced plans to double its quarterly dividend to 70 cents per share, effective third-quarter 2021. Similarly, Goldman Sachs (GS - Free Report) and JPMorgan (JPM - Free Report) disclosed their intention to raise the dividend by 60% to $2 per share and 11% to $1 per share, respectively. Further, many banks authorized bigger share repurchase plans.
While such favorable developments make banks attractive to investors, let’s see whether it is worth considering PNC Financial stock based on the dividend income. Deeper research into the bank’s financial performance and fundamentals will help understand the risks and rewards.
PNC Financial stands solid from the balance-sheet perspective. Notably, total loans and deposits have witnessed a five-year (2016-2020) compound annual growth rate of 3.5% and 9.2%, respectively. In the first quarter of 2021, loans witnessed a decline on the slow resumption of business activities, while deposits continued to rise. Additional expected funding needs of commercial and consumer customers on gradual recovery of the economy are likely to escalate loans and deposit balance.
PNC Financial witnessed earnings growth of 2.2% over the last three-five years. Also, the Zacks Consensus Estimate for the company’s 2021 earnings has been revised upward over the past seven days, reflecting that analysts are optimistic regarding its earnings growth potential.
The stock has gained 28.5% over the past six months, underperforming 28.7% growth recorded by the industry it belongs to.
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PNC Financial (PNC) Announces Dividend Hike: Is it Sustainable?
The PNC Financial Services Group’s (PNC - Free Report) board of directors has declared a quarterly cash dividend on the common stock of $1.25 per share, indicating an increase of 10 cents per share or 9% from the second-quarter dividend of $1.15 per share. It will be paid out on Aug 5 to shareholders of record as of Jul 16, 2021.
Based on the increased rate, the annual dividend comes to $5 a share, resulting in an annualized yield of 2.6%, considering PNC Financial’s closing price of $191.74 on Jul 1.
Earlier this week, the companyannounced that its stress capital buffer (“SCB”) requirement will be 2.5%, beginning fourth-quarter 2021, for a four-quarter period. It also announced its intention to reinstate share repurchase programs with buybacks of up to $2.9 billion for the four-quarter period beginning in the third quarter of 2021.
This follows the Federal Reserve’s stress test results last week, in which all 23 participating banks passed. Subsequently, a plethora of banks cheered investors by announcing impressive capital deployment plans. Notably, Morgan Stanley (MS - Free Report) announced plans to double its quarterly dividend to 70 cents per share, effective third-quarter 2021. Similarly, Goldman Sachs (GS - Free Report) and JPMorgan (JPM - Free Report) disclosed their intention to raise the dividend by 60% to $2 per share and 11% to $1 per share, respectively. Further, many banks authorized bigger share repurchase plans.
While such favorable developments make banks attractive to investors, let’s see whether it is worth considering PNC Financial stock based on the dividend income. Deeper research into the bank’s financial performance and fundamentals will help understand the risks and rewards.
PNC Financial stands solid from the balance-sheet perspective. Notably, total loans and deposits have witnessed a five-year (2016-2020) compound annual growth rate of 3.5% and 9.2%, respectively. In the first quarter of 2021, loans witnessed a decline on the slow resumption of business activities, while deposits continued to rise. Additional expected funding needs of commercial and consumer customers on gradual recovery of the economy are likely to escalate loans and deposit balance.
PNC Financial witnessed earnings growth of 2.2% over the last three-five years. Also, the Zacks Consensus Estimate for the company’s 2021 earnings has been revised upward over the past seven days, reflecting that analysts are optimistic regarding its earnings growth potential.
The stock has gained 28.5% over the past six months, underperforming 28.7% growth recorded by the industry it belongs to.
PNC Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top Picks to Cash in on Artificial Intelligence
In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.
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