Shares of Morgan Stanley (MS) climbed after the bank announced plans for stock dividends and buybacks. Morgan Stanley shares rose over 3% after the company increased its dividend and announced a $20 billion stock buyback.
Goldman Sachs, Bank of America, and Wells Fargo also boosted their dividends. Goldman had one of the largest dividend increases, with a 25% hike to $2.50 per share. Bank of America’s increase came to 5%, while Morgan Stanley raised its dividend by 20%.
JPMorgan and Citigroup both held the line on their dividends, and said that increasingly stringent capital requirements forced the firms to keep them unchanged. JPMorgan did announce a new $30 billion stock buyback plan that began back in May.
"It is notable that JPMorgan and Citi did not increase their dividends given that they are much more cautious about the health of U.S. consumers than other banks, and even though they have ample capital to sustain a downturn, they still think it is prudent to be more capitalized during this period of uncertainty," said Caleb Silver, Editor-in-Chief of Investopedia.
The announcements came in the wake of the Federal Reserve’s bank stress tests that determined how much more capital banks could allocate to shareholders without depleting their capital. All 34 of the banks passed the test.