If we just use the 30% rule against Thomson Reuters’ consensus estimates of $4.72 EPS this year and $5.55 EPS for 2012, we would expect a dividend payment of roughly $1.42 on an annualized basis this year and about $1.66 annualized next year. If the 30% rule is used, then the new dividend will generate closer to a 3.0% yield.
We saw two research calls yesterday calling for the dividend reinstatement. Bank of America/Merrill Lynch reiterated a “Buy” rating in part on a significant hike in the dividend and also based upon a share buyback. BofA sees $1.00 and then rising eventually to $1.50. Credit Suisse expects that JPMorgan will be one of the first big banks to increase its dividend, with the timing being in the second quarter.
It is coming. Our bet is that the dividend hike occurs before the summer of this year, barring anything unforeseen. We also expect the bank to begin repurchasing shares of common stock and we would not be shocked if it lowered some of the preferred issues through time.
JON C. OGG
Contact [email protected] for any questions or corrections.
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