While stocks are reacting partly to lower oil today, there's another group that is also strong: banks. Partly, this is due to modestly positive comments coming out of Bank of America's analyst meeting, its first in four years.
But there is also increasing optimism that a select group of large banks will soon be able to significantly raise dividends.
The key date is March 20, when the government will communicate with the 19 banks that received TARP money and indicate which will be able to raise dividends. These are likely to be private communications, but those banks given the blessing will likely move quickly.
Expect several to announce dividend raises on March 21.
How much? Recall most big banks slashed their dividends to $0.01 or $0.05 per quarter. Several, including JPMorgan , PNC , Wells Fargo , and US Bancorp , are likely to raise dividends significantly.
Regulators are capping the dividend at 30 percent of earnings. JPM, for example, will likely make $5.00 in 2011...that means they could raise to as much as roughly $0.40 per quarter...but there has already been indications they will raise to $0.25 or so. Still, that is a big move from $0.05, and will put them at a respectable 2 percent dividend. The old dividend, by the way, was $0.38.
Three banks have not repayed the TARP money: KeyCorp , Suntrust and Regions Financial . The will likely be told how much money they have to raise to repay the TARP money.
Not everyone may raise the dividend. Citigroup or Fifth Third , for example, may do little or nothing. In an analyst meeting today, BAC CEO Brian Moynihan said he is expecting a "modest" dividend payout in the second half of the year.
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