SunTrust: A Bank Raising Its Dividend! (STI)

Most banks have been having to be quiet as a church mouse not let their CDO and mortgage operation murder their books all at once.  many banks and financials have had to lower their dividends.  Some are failing and some are destined to fail

Companies that RAISE their dividends are deemed as "confident in their future and their ability to post consistent earnings."  Enter the news from SunTrust Banks. Inc. (NYSE: STI).  Today it hiked its dividend by 5% and its previous $2.92 annualized dividend is now going to be a higher level at $3.08 EPS.  This will now carry a 4.7% dividend yield, not a crummy one at all.  That is better than most of our Dogs of the Dow dividends.

SunTrust noted that this "reflects the strength of SunTrust’s underlying financial resources" and "confidence in the Company’s ability to successfully manage through the current environment."

What a stark difference this is to others.  We recently gave a full list of companies we thought may CUT the dividend.  We have noted this as one of the potential candidates in financial mergers, and this might as well be a reason we tied this one to Warren Buffett before.

SunTrust shares are at $64.80 +/- on last look.  Its 52-week trading range is $54.30 to $94.18.  Analysts have an average target of $64.00 or higher.  This might even trigger some upgrades from a negative analyst community that is desperate to find an oasis in a miserably hot desert.

Jon C. Ogg
February 12, 2008