U.S. Bancorp Joins Dividend Cutting Party

U.S. Bancorp (USB: 25.47 +2.04%) became the latest financial service company to announce a dividend cut. The company said today that their board of directors had approved an 88% reduction in their quarterly dividend from $.425 per share to $.05 per share.

The cut reduces the dividend yield from 11.9% to 1.6%.

U.S. Bancorp Chairman and CEO Richard K. Davis said, “The decision to reduce our quarterly dividend was thoughtfully considered and very difficult, given the importance of the dividend to our shareholders. It was, however, the right decision, as our industry continues to confront uncertainty in the financial markets and a weakening economy. It is important for our shareholders to know that we are not reducing the dividend and preserving capital from a position of weakness, but from a position of strength and a desire to continue to invest in and expand our business.”

“It is also important for our shareholders to know that we are committed to returning the dividend to a normalized rate as soon as possible.”

Since the beginning of the year, U.S. Bancorp shares have lost half their value as financial institutions continue to feel the pressure of mounting loan losses. However, in early trading the stock was up 1% to $12.70 on news of the dividend cut.

The dividend will be payable on April 15, 2009 to shareholders of record as of March 31, 2009.