KeyCorp’s (KEY - Free Report) board of directors have approved a 14.3% hike in the quarterly common stock dividend. The revised quarterly dividend is now 12 cents per share versus the previous figure of 10.5 cents. The dividend will be paid on Jun 15 to shareholders of record as of May 29.
Prior to this hike, the company raised its dividend by 11% to 10.5 cents per share in November 2017.
Along with the common stock dividend, the company will also pay a per share dividend of $312.50, on the corporation's outstanding Fixed-to-Floating Rate Perpetual Non-Cumulative Preferred Stock, Series D, on Jun 15 to shareholders of record as of May 31, for the Mar 15-Jun 15 period.
Also, the company announced its plan to pay a dividend of $15.3125, on the corporation's outstanding Fixed-to-Floating Rate Perpetual Non-Cumulative Preferred Stock, Series E, on Jun 15 to its shareholders as of May 31, for the Mar 15-Jun 15 period.
We remain optimistic about its potential to continue enhancing shareholder value, driven by strong cash-generation capabilities.
Considering last day’s closing price of $20.06 per share, the dividend yield is currently valued at 2.4%.
Investors interested in this Zacks Rank #3 (Hold) stock can have a look at its fundamentals and growth prospects.
Earnings Strength: KeyCorp depicts stable earnings picture. In the past three to five years, the bank witnessed earnings per share (EPS) growth of 8.7%, higher than the industry average of 5.3%. Also, the company’s earnings are projected to grow more than 32% in 2018 compared with 29.9% for the industry.
Further, the company’s long-term (three-five years) EPS growth rate of 9.5% promises reward for shareholders.
Revenue Growth: Organic growth has remained strong for KeyCorp, which can be seen from its revenue story. Revenues witnessed a CAGR of 15.3% over the last four years (2014-2017), with the trend continuing in the first three months of 2018.
The company’s projected sales growth of 3.6% for 2018 and 4.5% for 2019 indicates constant upward momentum in revenues.
Credit Quality: Improving credit quality continues to be a growth catalyst for KeyCorp. The bank has been witnessing a decline in provision for loan losses over the past several quarters. For 2018, management anticipates the net charge-offs (NCOs) rate to be lower than the target range while provisions are expected to rise modestly, given the loan growth.
Stock Undervalued: KeyCorp has a P/E (F1) ratio and P/S ratio of 11.7 and 3.0 compared with the industry’s average of 12.8 and 3.2, respectively. Based on these ratios, the stock seems undervalued.
However, the company’s shares have gained 10% in the last year, underperforming 17.5% growth for the industry it belongs to.
Stocks to Consider
A few better-ranked stocks in the same space are Northern Trust Corp. (NTRS - Free Report) , Comerica Inc. (CMA - Free Report) and State Street Corp. (STT - Free Report) .
Shares of Northern Trust have gained 17.7% over the past twelve months. Its Zacks Consensus Estimate for the current-year earnings has moved 5.2% higher over the last 60 days. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Comerica currently has a Zacks Rank #2 (Buy). Its shares have gained 37.8% in the past year. Its Zacks Consensus Estimate for the current year has been revised 5.2% upward over the last 60 days.
State Street’s shares have gained 22.1% over the past twelve months. Its Zacks Consensus Estimate for the current-year earnings has climbed 1.3% upward over the last 60 days. It also has a Zacks Rank of 2.
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