High dividend yield
Dividend yield is a company’s annual dividend per share. It’s expressed as a percentage of its share price. Among other banks, Fifth Third Bancorp (FITB) has the highest dividend yield. BB&T’s (BBT) yield is greater than both Regions Financial (RF) and SunTrust Bank (STI). Together, these four banks form ~5.4% of the SPDR S&P Regional Banking ETF (KRE) and ~3.5% of the iShares U.S. Financial Services ETF (IYG).
The above graph compares BB&T’s dividend yield with its peers. Dividend yields are important if you’re looking for a regular stream of income from your portfolio.
BB&T’s board of directors granted authority for the repurchase of up to 50 million shares of BB&T’s common stock in 2006. It’s important to note that 44 million shares, around 6% of the total shares outstanding, remain available for repurchase under this plan. No shares were repurchased under the 2006 repurchase plan during 2014, 2013, or 2012.
BB&T plans to increase capital distribution in 2015
For 2015, BB&T’s targeted payout strategy is allocating 15%–25% of earnings for organic growth, 30%–50% in dividends, and the remaining 30%–50% in strategic investments, buyback, or special dividends.
The actual payout in 2014 had 60% of earnings invested in organic growth, 35% in dividends, and 5% in strategic opportunities.
Current FRB (Federal Reserve Board) rules require large banks with $50 billion or more of assets to submit their annual capital plans for Comprehensive Capital Analysis and Review, or CCAR. Covered banks may pay dividends and repurchase stock only in accordance with a capital plan that has been reviewed and approved by the FRB.
The FRB didn’t object to BB&T’s 2014 capital plan. The bank submitted the 2015 capital plan in January 2015.