We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Banks Lift Payouts Amid Successful Stress Test: ETFs in Focus
Read MoreHide Full Article
America's top banks announced plans to raise their third-quarter dividends following successful results from the Federal Reserve’s latest annual stress test. The results indicate that the banks have sufficient capital to weather severe economic disruptions, including recession, high unemployment, and market instability.
JPMorgan Leads the Pack With Dividend Hike and Major Buyback
JPMorgan Chase, the largest U.S. bank, disclosed in a regulatory filing that it will increase its dividend to $1.50 per share, up from $1.40. In addition, the bank unveiled a new $50 billion share repurchase program, effective immediately, with no set end date.
JPMorgan CEO Jamie Dimon stated that the share buyback gives the bank flexibility to return capital “as we see fit,” reinforcing confidence in the financial system’s resilience.
Other Major Banks Announce Dividend Increases
Other banking giants followed suit with their own dividend hikes:
Bank of America plans to increase its dividend by 8%, raising it to 28 cents per share.
Wells Fargo will lift its dividend to 45 cents, up from 40 cents.
Morgan Stanley will raise its dividend to $1 per share and has approved a $20 billion share buyback with no fixed duration.
Goldman Sachs will boost its dividend to $4 compared to the previous $3.
Citigroup will increase its payout to 60 cents per share from 56 cents.
Strong Capital Positions Across the Sector
According to the Fed’s 2025 stress test, banks on average maintained a Common Equity Tier 1 (CET1) capital ratio of 11.6%, well above the regulatory minimum of 4.5%. The six largest banks in the country all showed double-digit capital ratios, reflecting their ability to endure financial shocks.
Fed Eyes Changes to Stress Test Framework
The Federal Reserve is currently working on changes to its stress testing methodology. In a proposal released in April, the central bank suggested averaging stress test results over two years, a move aimed at reducing outcome volatility and increasing predictability.
Higher Capital Requirements Possible Under New Model
Although the rule-making process is still in progress, the Fed said that if the results from 2024 and 2025 had been averaged, banks would have needed to hold more capital to satisfy the regulatory thresholds.
ETFs in Focus
Against this backdrop, financials-based exchange-traded funds (ETFs), such as Financial Select Sector SPDR Fund (XLF - Free Report) , Vanguard Financials ETF (VFH - Free Report) and Invesco KBW Bank ETF (KBWB - Free Report) , should gain ahead.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Banks Lift Payouts Amid Successful Stress Test: ETFs in Focus
America's top banks announced plans to raise their third-quarter dividends following successful results from the Federal Reserve’s latest annual stress test. The results indicate that the banks have sufficient capital to weather severe economic disruptions, including recession, high unemployment, and market instability.
JPMorgan Leads the Pack With Dividend Hike and Major Buyback
JPMorgan Chase, the largest U.S. bank, disclosed in a regulatory filing that it will increase its dividend to $1.50 per share, up from $1.40. In addition, the bank unveiled a new $50 billion share repurchase program, effective immediately, with no set end date.
JPMorgan CEO Jamie Dimon stated that the share buyback gives the bank flexibility to return capital “as we see fit,” reinforcing confidence in the financial system’s resilience.
Other Major Banks Announce Dividend Increases
Other banking giants followed suit with their own dividend hikes:
Strong Capital Positions Across the Sector
According to the Fed’s 2025 stress test, banks on average maintained a Common Equity Tier 1 (CET1) capital ratio of 11.6%, well above the regulatory minimum of 4.5%. The six largest banks in the country all showed double-digit capital ratios, reflecting their ability to endure financial shocks.
Fed Eyes Changes to Stress Test Framework
The Federal Reserve is currently working on changes to its stress testing methodology. In a proposal released in April, the central bank suggested averaging stress test results over two years, a move aimed at reducing outcome volatility and increasing predictability.
Higher Capital Requirements Possible Under New Model
Although the rule-making process is still in progress, the Fed said that if the results from 2024 and 2025 had been averaged, banks would have needed to hold more capital to satisfy the regulatory thresholds.
ETFs in Focus
Against this backdrop, financials-based exchange-traded funds (ETFs), such as Financial Select Sector SPDR Fund (XLF - Free Report) , Vanguard Financials ETF (VFH - Free Report) and Invesco KBW Bank ETF (KBWB - Free Report) , should gain ahead.