Wells Fargo has consistently performed well in stress tests, which has enabled it to increase its dividends annually. On June 29, 2016, the Federal Reserve approved Wells Fargo’s capital plans after it found that Wells Fargo could keep lending in a severe economic downturn. This clears the way for Wells Fargo to rewards its investors through dividends and share repurchases.
Wells Fargo (WFC) reiterated its previously disclosed $0.38 dividend and didn’t give any update on share repurchases. On April 26, 2016, the company increased its quarterly common stock dividend to $0.38 per share from $0.375 earlier. For more on this topic, please read Did Wells Fargo Pass the Fed’s Stress Test?
Wells Fargo’s dividend payout ratio of 35.8% is slightly lower than the cap of 40%. Wells Fargo will continue to pay its investors the current dividend of $0.38 per share. Its dividend yield of 3.4% is the highest among its peers.
Such high yields, coupled with the bank’s strong balance sheet and profitability, is its greatest competitive advantage. In the two-year period between 2Q14–1Q16, the company returned $34 billion to shareholders, outpacing its peers JPMorgan Chase (JPM), Bank of America (BAC), and Citigroup(C).
Wells Fargo added 350 million shares to its share repurchase authorization in January 2016, reflecting the company’s confidence in its current valuations as well as its long-term prospects. For more information on this topic, please read Wells Fargo: Capital Return Outpaces Its Peers.
In the second quarter, Wells Fargo (WFC) announced dividends of $0.38 per share. The company’s dividend yield of 3.1% is significantly higher than other banking players that constitute 48% of the Financial Select Sector SPDR ETF (XLF).