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How Is JPMorgan Creating Shareholder Value?



JPMorgan’s dividends

The Federal Reserve approved JPMorgan Chase’s (JPM) capital plans for 2016 after it passed the annual stress test. In a release last week, the bank said it would keep its dividends constant at $0.48 per share but raise share repurchases to $10.6 billion.

JPMorgan has boosted its dividend payout annually over the past five years. Wall Street (SPY) analysts expected the bank to announce a share repurchase plan of around $8 billion.

For 1Q16, JPMorgan announced dividends of $0.44 per share, flat on a quarterly basis but 10% higher than 1Q15. This translates to a dividend yield of 2.9% on an annualized basis based on the closing price of $60.19 on Wednesday, July 6, 2016.

In 2015, the company paid dividends of $1.72 per share and repurchased $4.5 billion worth of common stock.

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Share repurchase plans

JPMorgan increased its share repurchase authorization to $1.9 billion in March 2016, reflecting the company’s increased confidence in its current valuation as well as its long-term prospects. This is in addition to the bank’s share buyback authorization of $6.4 billion last year.

Other banks returning capital to shareholders by repurchasing shares include Bank of America (BAC), Capital One Financial (COF), and Wells Fargo (WFC).


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