America’s 4 Biggest Banks Are Raising Dividends. Which Has the Strongest Payout?
All four of America's biggest banks raised their dividends this year, but the capital cushions backing those payouts vary far more than the yields suggest. One lender sits just 90 basis points above its regulatory minimum, and that gap could…
When a recession hits, the bank dividends that survive belong to the lenders with the deepest capital cushions. That makes balance sheet strength the right lens for America’s four biggest banks: JPMorgan Chase (NYSE:JPM | JPM Price Prediction), Bank of America (NYSE:BAC), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC). All four raised their quarterly payouts this year, and the scale of the cushion behind them is enormous. JPMorgan alone holds $1.5 trillion of cash and marketable securities.
Bank dividends follow a different rulebook. Regulators require large banks to hold common equity tier 1 (CET1) capital, their highest-quality loss-absorbing equity, above a minimum share of risk-weighted assets. The Federal Reserve’s annual stress test then adds a buffer based on how much capital each bank would burn in a severe recession. So a bank can be highly profitable and still be limited in what it returns. That is why bank payout ratios look low next to those of utilities or REITs: retained earnings are required capital. The trade-off is cyclicality. Credit losses climb in downturns, and net interest income (NII) moves with rates. Bank of America estimates a 100 basis point rate increase adds ~$1.4B of NII over 12 months, while a 100 basis point cut removes $1.9B.
JPMorgan Chase: The Deepest Capital Cushion in the Group
JPMorgan’s annualized forward dividend of $6.60 per share against a share price of $335 works out to a yield of about 1.97%, the lowest of the four. What income investors get in exchange is coverage. Trailing dividends of $6.15 against trailing EPS of $23.34 put the payout ratio near 26.3%.
The capital position is the strongest in this group. The standardized CET1 ratio stands at 13.9%, and management estimates roughly $30 billion of excess capital. Third-quarter net income was $15.3 billion, or $5.57 per share, with a 20% return on tangible common equity. Chief Executive Jamie Dimon put the dividend at the top of the capital stack: “After you pay your dividend, which hopefully will be steady, we really like investing in organic growth.”
The track record backs that up. The quarterly payout grew from $0.48 in late 2016 to $1.65, and it held at $0.90 through the pandemic stretch. The latest raise from $1.50 pays on 2026-10-31.
Bull case: The dividend uses only about a quarter of earnings, and management is putting the rest of its capital into growth it expects to earn strong returns, which supports future raises. Risk: The CFO warned that energy prices and higher rates mean “there are a lot of pressures building up” in corporate and commercial real estate credit.
Bank of America: Highest Yield, Thinnest Buffer
The recent selloff lifted Bank of America’s yield to about 2.49%, based on a $1.28 forward dividend and a $51.32 share price. The stock is down 13.7% over the past month after third-quarter adjusted EPS of $1.08 came in below the $1.10 estimate and a $1.2B regulatory settlement tied to anti-money-laundering consent orders weighed on GAAP results.
Earnings coverage is solid. Trailing dividends of $1.16 against EPS of 4.28 give a payout ratio near 27.1%. Liquidity is deep at $914 billion, and credit is improving: the net charge-off ratio fell to 0.44%. The dividend rose from $0.05 in 2016 to $0.32, held at $0.18 through 2020, and most recently stepped up from $0.28.
Bull case: The core bank is firing. NII rose 8% to $16.45B, and management expects it to keep improving through 2027. The bank still returned $8.3B in the quarter, including $2.2B of dividends, and trades at about 11 times forward earnings. Risk: Its CET1 ratio of 10.9% sits just 90 basis points above the regulatory minimum, the narrowest gap here. Another penalty or a credit shock would squeeze buybacks first and limit how fast the dividend can grow.
Citigroup: A Rebuilt Dividend Backed by a Turnaround
Citigroup yields about 2.19% on a $2.68 forward dividend and a $122.24 share price. Its payout ratio is the lowest of the four at roughly 24.1% (trailing dividends of $2.47 against EPS of 10.26).
The quarterly dividend fell from $0.16 to $0.01 in the financial crisis and stayed there through 2014. It then rebuilt to $0.51, sat flat for years, and has been raised each year since 2023. The latest raise of 12% took it to $0.67.
The capital base supports that. CET1 stands at 12.8%, about 120 basis points above its 11.6% requirement. Citi reports over $1 trillion of available liquidity and more than $22 billion of reserves. Year-to-date buybacks hit $13.3 billion.
Bull case: The restructuring is lifting returns. Third-quarter ROTCE reached 11.5%, Services earned a 31.2% ROTCE, and the stock trades at 1.155 times book value with a forward P/E of 10. Risk: Citi expects an approximate $9 billion CTA-related loss when Banamex is deconsolidated in early 2027. Management says the process should be slightly accretive to CET1, but the headline charge will hit reported earnings, and Citi’s payout record shows a crisis can still force a reset.
Wells Fargo: Asset Cap Gone, Dividend Nearly Restored
Wells Fargo yields about 2.48% on a $2 forward dividend and an $80.51 share price, after a 12.19% year-to-date decline. Trailing dividends of $1.85 against EPS of 6.9 give a payout ratio near 26.8%.
Its track record carries a recent scar. Wells Fargo cut its quarterly dividend from $0.51 to $0.10 in 2020. Since then it has rebuilt in steady steps to $0.50, still a penny below the pre-cut level. Third-quarter EPS grew 13% to $1.87, ROTCE reached 16.3%, and the net loan charge-off ratio was just 38 basis points.
Bull case: With the asset cap removed, average loans and deposits each grew 11%, and management estimates the Basel III proposal could cut risk-weighted assets by about 7%, freeing capital. CEO Charlie Scharf said ROTCE “is getting closer to our 17 to 18% target.” Risk: CET1 is at 10%, the bottom of its “10 to 10.5%” target range, and higher rates already pulled it down through AOCI losses on its securities, which reduce regulatory capital. That leaves less room to keep raising both buybacks and the dividend if rates rise further.
Which Bank Dividend Stands on the Strongest Footing
All four banks pay out about a quarter of their earnings, and that low payout is the real safety margin in bank income. JPMorgan is the anchor, with the most excess capital and a dividend it held through 2020. Citigroup and Wells Fargo are rebuilders whose returns are finally catching up with their payouts. Bank of America offers the highest yield after its recent drop, with the thinnest buffer of the four, so its CET1 cushion is the number to watch as rates and credit conditions shift. For income investors who want payers with multi-decade raise streaks rather than cyclical rebuilders, we ranked ten of them by valuation in a free Dividend Kings report.
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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.
