State Street Corporation (STT) joined rewarding shareholders through enhanced capital deployment activities. Recently, the company announced an 8.3% hike in its quarterly dividend.
The Board of Directors at State Street declared a cash dividend of 26 cents per share, up from 24 cents paid previously. The new dividend is payable on Apr 12 to shareholders of record as of Apr 1. Last week, the company had also announced dividend of $1,312.50 per share on its non-cumulative perpetual preferred stock, Series C payable on Mar 15, to the shareholders of record as of Feb 28.
In Mar 2012, following the release of the Federal Reserve’s stress test results, the company hiked its quarterly dividend by 33.3% to 24 cents per share.
The announcement of the dividend rise comes on the back of State Street’s strong capital position. As of Dec 30, 2012, its Tier 1 capital ratio was 19.1% and its leverage ratio was 7.1%. In addition, the company’s Tier 1 common ratio was 17.1% and its Tangible common equity ratio was 7.2%.
As of Dec 31, 2012, estimated pro-forma Basel III tier 1 common ratio was 10.8%, after considering the requirements of 3 Notices of Proposed Rulemaking (NPRs) by the U.S. bank regulators. These sturdy financial figures well support the company’s decision to hike its dividend.
Concurrently, another financial firm T. Rowe Price Group, Inc.’s (TROW) Board of Directors approved a 12% hike in its quarterly common stock dividend to 38 cents per share. The revised dividend will be payable on Mar 27 to shareholders as of the close of business on Mar 13.
Among other companies in the same sector, in Jan 2013, Wells Fargo & Company (WFC) enhanced its quarterly common stock dividend by 14% to 25 cents per share, payable on Mar 1 to shareholders of record as of Feb 1, 2013. Further, in the same month, Comerica Incorporated (CMA) increased its quarterly common stock dividend by 13% to 17 cents per share. The dividend will be paid on Apr 1, to shareholders of record as of Mar 15.
We believe that even after announcing a dividend hike, State Street will be able to maintain its strong capital and balance sheet levels. This would position the company comfortably for expansion through acquisitions as well as grow organically.
State Street currently retains a Zacks Rank #2 (Buy).
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