In this article, let's take a look at JPMorgan Chase & Co. (JPM, Financial), the $246.68 billion market cap company which has recently announced a dividend hike.
Returning Wealth
The firm has an attractive dividend policy showing its commitment to return cash to investors in the form of dividends as it generates healthy cash flow on a regular basis. According to company reports, dividends have been paid since 1827.
The FED has reviewed the bank`s capital plan, which are done under the stress test conditions. Among the banks which got unconditional approval, J.P. Morgan was one of them. After the approval of JPMorgan`s capital plan, the bank has announced a 10% increase in its quarterly dividend to $0.44 from $0.40 per share, which will generate an annualized dividend of $1.76 per share. With a closing price of $66.57 it now offers an annualized dividend yield of 2.70%.
Hedge Fund Positions
As of March 2015, Ken Fisher (Trades, Portfolio)´s Fisher Asset Management reported holding 13.58 million shares, up by 1% on the quarter; the value of the stake amounts to $822.5 million. It is important to mention that the stock gained about 24.69% in the past 12 months and 6.22% in a year-to-date basis. We found this stock price appreciation very interesting, considering that the largest financial services exchange traded fund, the Financial Select Sector SfdPDR ETF (XLF, Financial) returned only 14.33% and 0.53%, respectively.
Other several investors reported long positions in the bank. Paul Ruddock and Steve Heinz´s Lansdowne Partners reported a position of 20.7 million shares, representing more than 11% of the portfolio, valued at $1.25 billion.
Another bank that has announced a dividend hike after Fed´s approval was Wells Fargo (WFC, Financial). It has announced a 7% increase in its quarterly dividend to $0.375 from $0.35 per share, generating an annualized dividend of $1.5 per share, and with a closing price of $56 it now offers a dividend yield of 2.7%.
Warren Buffet is the largest shareholder of this bank, which upped its stake by 2% on the first quarter of 2015 to 470.3 million shares valued at $25.6 billion; the position accounted for almost 24% of the fund’s equity portfolio and was the largest in terms of value. Further, Ken Fisher (Trades, Portfolio) reported holding 18.5 million shares, up by 1% on the quarter; the value of the stake amounts to $1.billion.
In a previous article we found that Wells Fargo was fairly valued according to our dividend discount model. In a next article, we are going to calculate the intrinsic value for JPMorgan to determine if it is over, under or fairly valued.
Disclosure: Omar Venerio holds no position in any stocks mentioned.
