U.S. Bancorp Announces 13.5% Dividend Hike: Worth A Look?
Zacks Investment Research | Sep 17, 2019 09:16PM ET
Recently, U.S. Bancorp’s (NYSE:USB) board of directors announced a 13.5% hike in the company’s quarterly common stock dividend. The revised quarterly dividend comes at 42 cents per share compared with the previous figure of 37 cents. This dividend will be paid on Oct15 to shareholders of record as of Sep 30, 2019.
The latest hike is in line with the company’s 2019 capital plan, which also includes a share-repurchase program of up to $3 billion for a four-quarter period which began on Jul 1, 2019. Notably, U.S. Bancorp returned 79% of its earnings to shareholders through dividends and share repurchases as of Jun 30, 2019, within the targeted payout ratio of 60-80%.
Since 2011, U.S. Bancorp has been raising its dividend consistently. From paying 12.5 cents a share as quarterly dividend, the company has come a long way in terms of its capital strength. Prior to this hike, the company had raised its dividend by 23% (from 30 cents to 37 cents per share) last September.
Considering Tuesday’s closing price of $55.90 per share, the dividend yield is currently valued at 3.01%.
The business model of U.S. Bancorp is quite impressive as it enables the company to generate sufficient capital, strengthen its balance sheet and help return capital to shareholders. Moreover, we believe strategic acquisitions will expand the company’s business and enhance its profitability over time.
The company’s strong capital position and expanded business through acquisitions, along with steady organic growth, aided by rising loans and deposits, and improved credit quality, will drive its profit figures. However, escalating costs might limit its growth to some extent.
During the six-month period ended Jun 30, 2019, the company paid roughly $1.2 billion in dividends to the common shareholders. Additionally, it repurchased common stock worth about $1.4 billion during the period. Cash and due from banks, exiting the quarter, were about $16.9 billion.
U.S. Bancorp’s price performance also remains impressive. Shares have rallied 7.1% in the past three months compared with 5.8% growth recorded by the Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.