Healthy Banks May Be Allowed to Boost Dividends

The Federal Reserve may soon allow healthy banks to increase dividend payments to stockholders, according to a report from the Wall Street Journal Thursday.


Federal regulators, sources told the Journal, are likely to shortly announce the criteria, including specific capital standards, banks must meet for dividend increases.

Despite a seeming willingness to increase dividend payouts, many banks have had to delay such payments until they are cleared for compliance with a number of new financial regulations passed in the last year, including the United States's Dodd-Frank Act and a series of global capital rules known as "Basel III."

Clearances to up dividend payouts would likely be seen as a sign of improvement in the financial sector, sources told the Journal.

"It signals that the health of the system has improved and will continue to improve going forward," said Todd Hagerman, an analyst with Collins Stewart.