Daily dividend news for investors in dividend stocks

Without Vaccine, Bank Dividend Cuts Inevitable, Starting With Wells Fargo

Published Mon, 29 Jun 2020 08:28:10 -0400 on Seeking Alpha

Seeking AlphaDividend Quick Picks | Financials Without Vaccine, Bank Dividend Cuts Inevitable, Starting With Wells FargoJun. 29, 2020 8:28 AM ET|| Includes: ALLY, AXP, BAC, BK, CFG, COF, DFS, FITB, GS, HBAN, JPM, KEY, MS, MTB, NTRS, PNC, RF, STT, TFC, WFCby: Richard J. ParsonsRichard J. Parsons Banks10X Risk Management LLC.cls-1{fill:#024999;}SummaryThe Federal Reserve Board acknowledged on June 25 that bank capital is adequate but the Stress Test was not stressful enough.
In its press release, the Fed noted that "recent earnings" will be a factor in determining their approval of bank dividends.
It appears 99% certain that Wells Fargo will cut its dividend imminently as recent earnings cannot cover dividends.
Unless the economy makes a 180-degree turn by year-end (requires a 2020 vaccine?), expect almost all the other big banks to reduce dividends this year.
I am confident that the nation's bankers and regulators can navigate these difficult times provided politicians do not politicize banks as they did 2008-2009.
2020 Fed Stress Test Headlines No share buybacks in Q3 No increase in dividends in Q3 Limiting dividends based on "recent earnings" "The banking system has been a source of strength during this crisis," Vice Chair Randal K. Quarles said, "and the results of our sensitivity analyses show that our banks can remain strong in the face of even the harshest shocks." See Federal Reserve Board’s press release June 25.
Governor Lael Brainard did not agree with the Fed Board's decision. In a separate Fed press release, she said, "This is a time for large banks to preserve capital, so they can be a source of strength in a robust recovery. I do not support giving the green light for large banks to deplete capital, which raises the risk they will need to tighten credit or rebuild capital during the recovery."
Chart 1 provides a snapshot of just how better capitalized banks are in 2020 than 2008-09. (The Fed reports a slightly lower tier-1... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
WELLS FARGO 48.65   10.0 4.84 2.04 4.22
KEYCORP 18.03   10.7 1.68 0.74 4.08
CITIZENS FINANCIAL GROUP 36.37   9.7 3.74 1.44 3.97
HUNTINGTON BANCSHARES 14.65   11.5 1.27 0.60 3.90
REGIONS FINANCIAL 16.25   10.1 1.61 0.62 3.87
FIFTH THIRD BANCORP 28.03   9.5 2.94 0.96 3.44
PNC FINANCIAL SERVICES GROUP 137.17   12.4 11.06 4.60 3.34
MORGAN STANLEY 44.32   9.7 4.59 1.40 3.21
STATE STREET 60.27   10.9 5.51 1.88 3.20
JPMORGAN CHASE 117.91   12.0 9.79 3.60 2.74
BANK OF NEW YORK MELLON 46.31   12.0 3.85 1.24 2.71
M&T BANK 156.79   11.2 13.98 4.00 2.58
NORTHERN TRUST 97.56   14.8 6.61 2.80 2.54
BANK OF AMERICA 29.67   10.6 2.80 0.72 2.45
GOLDMAN SACHS 218.74   9.2 23.84 5.00 2.32
DISCOVER FINANCIAL SERVICES 84.50   9.9 8.55 1.76 2.09
CAPITAL ONE FINANCIAL 92.91   8.0 11.57 1.60 1.74
AMERICAN EXPRESS 119.02   14.8 8.07 1.56 1.33


Older articles featuring Wells Fargo (WFC):
ClearBridge Dividend Strategy Portfolio Manager Commentary Q2 2020
Techniques To Avoid Dividend Cuts
Blue Chip DRiP Portfolio: June Dividends And Covered Calls Update
Dividend Growth 50: Big Income Growth, Minimal Pandemic Peril
Billionaire Quietly Buying This 8% Dividend Stock: Here’s Why
Of 50 Stocks Billionaires Hold In July, 29 Pay Dividends And 7 Are Priced To Buy
3 Blue Chips For Non-ESG Investors With Up To 8% Yield
The 8% Dividend Sleeve
Dividend Challenger Highlights: Week Of May 24
Wells Fargo & Company Declares Cash Dividends on Preferred Stock