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JPMorgan (JPM) Hikes Dividend After Record Profit in 2023

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JPMorgan (JPM - Free Report) has raised its quarterly dividend for the second time in the past year. The country’s biggest lender has announced a dividend of $1.15 per share, marking a 9.5% increase from the prior payout. The dividend will be paid out on Apr 30 to shareholders on record as of Apr 5.

Last year, following the clearance of the 2023 stress test, JPM increased its quarterly dividend by 5% to $1.05 per share. This followed no change in dividend payout in 2022.

Based on the last day’s closing price of $193.79, the company’s dividend yield currently stands at 2.37%.     

Raising quarterly dividends seems to be a way to reward its shareholders after notching record profits last year despite turmoil in the banking industry and challenging macroeconomic backdrop.

Though JPM wasn’t untouched by the deposit flight and drastic rise in funding costs (interest expenses surged 212% in 2023), its net income jumped 32% year over year to $49.6 billion. One of the primary reasons for the improvement was the acquisition of First Republic Bank in May. This, along with higher interest rates, strong deposit balance and decent loan demand, offered support.

JPMorgan also has a share repurchase program in place. The company intends to continue with its previously approved buyback plan worth $30 billion (announced in April 2022). As of Dec 31, 2023, almost $19.7 billion worth of authorization remained available. Management expects the pace of share buybacks to be modest in 2024 after having repurchased shares worth roughly $9.9 billion last year.

JPMorgan has a solid balance sheet position. As of Dec 31, 2023, the company had a total debt of $653.1 billion and cash and due from banks and deposits with banks were $624.2 billion. The company also maintains long-term issuer ratings A-/AA-/A1 ratings from Standard and Poor’s, Fitch Ratings and Moody’s Investors Service, respectively, as well as a stable outlook.

Though the company noted that it will not be possible to match records set in 2023 on the back of high rates and normalization of business trends, we believe its capital distribution seems sustainable, driven by solid liquidity and capital positions.

Shares of JPMorgan have rallied 14% so far this year, outperforming the industry’s growth of 8.9%.
 

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Currently, JPM carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Banks Taking Similar Actions

Guaranty Bancshares, Inc. (GNTY - Free Report) announced a quarterly cash dividend of 24 cents per share, representing a hike of 4.3% from the prior payout. The dividend will be paid out on Apr 10 to shareholders of record as of Mar 25.

Prior to this, GNTY increased its quarterly dividend by 4.5% to 23 cents per share. Over the past five years, the company raised its dividend seven times, with annualized dividend growth of 9.8%. At present, the company's payout ratio is 36% of earnings.

BankUnited, Inc. (BKU - Free Report) has increased its quarterly dividend. The company announced a quarterly cash dividend of 29 cents per share, marking an increase of 7.4% from the prior payout. This dividend will be paid out on Apr 30 to shareholders of record as of Apr 12.

Prior to this, BKU hiked its dividend by 8% to 27 cents per share on Feb 23, 2023. The company has increased its dividend payout four times in the past five years. Also, the company has five-year annualized dividend growth of 5.67%. Currently, the company’s payout ratio is 38% of earnings.


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