Wells Fargo & Co. (NYSE: WFC) has delivered on what we expect to be the first of the likely big bank dividend hikes in 2013. We would look for J.P. Morgan Chase & Co. (NYSE: JPM) to try to resume its dividend hikes, while the future payouts from Bank of America Corp. (NYSE: BAC) and Citigroup Inc. (NYSE: C) remain wild cards on the dividend chase.
Today’s dividend hike announcement takes the common stock dividend up to $0.25 per common share per quarter. This represents a 14% dividend hike, after factoring in the three cents per quarter higher.
The dividend is payable March 1, 2013, to Wells Fargo’s shareholders of record on February 1, 2013. Wells Fargo has approximately 5.3 billion shares outstanding, so Wells Fargo is going to be sending back about $1.325 billion per quarter back to its common stockholders each quarter. The new dividend yield based on a $35.04 closing price is also going to be 2.85%.
With a Thomson Reuters consensus earnings estimate of $3.64 per share for 2013, Wells Fargo’s normalized income payout comes to only about 27.5% of its expected earnings this year.
As far as how this yield compares elsewhere to bank dividends from the common stock:
- J.P. Morgan’s yield is 2.6%.
- Bank of America’s yield is only 0.4%.
- Citigroup’s yield is way down the list at 0.1%.
Now you know why we have voted Wells Fargo as the current leader of the 7 Safest Banks in America.