Truist Financial Has One Big Question Hanging Over Its Dividend
Truist Financial has held its dividend frozen since 2022 while rivals PNC and U.S. Bancorp hand shareholders raises, and the reason why reveals a capital strategy that splits income investors right down the middle.
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Truist Financial (NYSE:TFC | TFC Price Prediction) has paid $0.52 per quarter on every ex-dividend date since August 11, 2022. Over the same stretch, management has kept raising its buyback target, which now stands at $5 billion for 2026, up from $4 billion. For income investors, the open question is whether any of that excess capital ever reaches the dividend.
A 4.5% Yield That Has Been Frozen Since 2022
At $46.33, the $2.08 annualized payout yields about 4.5%. PNC Financial Services (NYSE:PNC) yields roughly 3.6% at its new $2.00 quarterly rate. U.S. Bancorp (NYSE:USB) yields about 3.6% at $0.52 a quarter. Truist’s coverage is solid. Second-quarter diluted EPS came in at $1.23, up 37% year over year, so the dividend took up only about 42% of quarterly earnings.
Buybacks Are Getting Every Spare Dollar
Truist bought back $1.1 billion of stock in Q1 and $1.2 billion in Q2. On the July call, CFO Mike Maguire defended the pace:
“If you look at our buyback at $5 billion, we’re pretty elevated, right? We’ve got a total net payout ratio above 100%. By the way, we think that’s appropriate, given our capital position.”
CET1 capital rose to 10.9%. Truist wants that ratio at 10% by the end of 2027, which Maguire said “implies that we’re going to continue to return a significant amount of capital to shareholders throughout the rest of this year and next year.” The call included no announcement of a dividend change.
Its peers are taking a different route. PNC raised its dividend 18% in July, and CEO William S. Demchak called the increase “further evidence of the strength and resilience of our franchise.” U.S. Bancorp planned a ~4% increase for Q3 2026, subject to board approval, while repurchasing only $200 million in Q2.
What the Share Price Is Pricing In
Truist trades at about 12x 2025 EPS of $3.82, while PNC and U.S. Bancorp trade near 13x. That small discount helps explain the buyback push. The shares are down 2.96% year to date, while PNC is up 8.02% and U.S. Bancorp is up 11.53%. Over five years, Truist is down 1.94%. Investors are paying for a yield and remain doubtful about growth.
Credit Trends and a New CEO Could Change the Math
Nonperforming loans rose to 0.50% in Q1, and net charge-offs climbed to 0.61%, driven by commercial construction. U.S. Bancorp’s ratio was 0.53% and PNC’s was 0.25%. Truist also cut its outlook for net interest income growth to 1% to 1.5%, citing an unfavorable deposit mix.
Mike Lyons was slated to become CEO on September 1, 2026. Bill Rogers, CEO at the time of the call, said: “Let’s let Mike come in and talk about what he wants to do.”
Three developments would undermine the case: charge-offs running well above the 55 bps guidance, CET1 falling to 10% ahead of schedule, or ROTCE missing the greater than 14% 2026 target.
What Income Investors Can Expect From the Dividend
The dividend looks safe, and it is likely to stay at $0.52. Earnings cover it more than twice, and management has made clear that buybacks come first until CET1 reaches its target. Retirees get the highest yield of the three banks but no raises. The first real signal on growth will come from the new CEO’s capital plan, most likely alongside third-quarter results.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
