RBC Speculates on JP Morgan Dividend Increase
- July 14, 2010
- Dividend Aristocrats, Dividend Investing, Dividend Stocks, Top Dividend Stocks
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RBC Capital Markets initiated coverage of JP Morgan Chase (JPM: 37.86 -1.15%) today with an “outperform” rating and a $45 price target.
Dividend investors will be interested to know that RBC analyst Gerard Cassidy is forecasting a significant dividend increase by the second quarter of 2011. “It is hard for us to conceive of a substantial dividend not coming by some time in 2011 and reaching adjusted normalized payout levels by 2012″, said Cassidy.
JP Morgan slashed their dividend by 87% early in 2009 and the stock now pays only a paltry 0.5% dividend yield or $.20 per share. However, investors are looking for brighter days (and higher payouts) in the quarters ahead.
JP Morgan CEO, Jami Dimon, had hinted in April that the banking giant could increase their dividend to $.75 - $1.00 per share. RBC analyst Cassidy speculates that the dividend could increase to as high as $1.80 annually. While that it certainly a dramatic increase, it’s not out of the real of possibility.
Wall Street analysts expect JPM to earn $4.67 per share next year. Even with annual dividend of $1.80 per share, the company would still have a comfortable payout ratio of below 40%.
JP Morgan is clearly the preeminent firm on Wall Street. The financial stock will be a position to comfortably restore their dividend well before their lesser peers like Citigroup (C: 33.66 -1.67%) or Bank of America (BAC: 8.18 +0.62%). In fact, Bank of America has already warned investors to expect a smaller dividend in the future.
