JPMorgan Chase Raises Dividend to 25 Cents

It finally happened. JPMorgan Chase (JPM) just announced that they’re raising their quarterly dividend from 5 cents to 25 cents per share.

Before the financial crisis, JPM paid a dividend of 38 cents per share. In 2009, they cut it to five cents and held it there for the last eight quarters. The Fed just gave some banks approval for dividend increases. Earlier, Jamie Dimon had said that he wanted the dividend to be to between 75 cents and $1 per share, so he seems to have gotten his wish.

The board also authorized a new $15 billion repurchase program of which up to $8 billion is approved for 2011.

Remarking on the dividend action and repurchase authorization, Jamie Dimon, Chairman and CEO, said, “We are pleased to be in a position to increase our dividend and to establish a new share repurchase program. Our current expectation is to return to a payout ratio of approximately 30% of normalized earnings over time. We will operate the business with the objectives of maintaining a Basel I Tier 1 Common ratio of at least 9.0% and meeting the Basel III requirements substantially ahead of time. Our earnings power will allow us to generate significant capital in excess of our objectives allowing us to aggressively invest in our future.”

Dimon added, “JPMorgan Chase has substantial organic growth opportunities – building branches, adding bankers, and expanding product and service capabilities globally. Quality organic growth is our top priority and our best use of capital. We expect, though at a minimum, essentially to repurchase the same amount of shares that we issue for employee stock-based incentive awards. Beyond this, we intend to repurchase stock only when we are generating capital in excess of what we need to fund our organic growth and when we think it provides excellent value to our existing shareholders.”

In October, I looked at the dividend potential of some major banks.

Posted by on March 18th, 2011 at 10:59 am


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