Across Wall Street, investors have been clamoring for returns on equities since the depths of the financial crisis. The large financial service institutions, once famous for their generous dividend payouts, were forced to slash them to raise capital levels and pass the stress tests. As the economic environment continues to rebound and banks return to profitability, dividend plans have become the center piece for a financial service rebound of investor confidence. Wells Fargo (NYSE: WFC), the San Francisco based banking giant seems to be the next in line to issue a cash dividend and that may bode well for the firm's share price.
Wells Fargo & Co. will issues its quarterly dividend of $0.22, payable on 6/1/12. As a percentage of WFC's recent stock price of $33.59, this dividend works out to approximately 0.66%. In general, dividends are not always predictable; but looking at the history can help in judging whether the most recent dividend from WFC is likely to continue, and whether the current estimated yield of 2.62% on annualized basis is a reasonable expectation of annual yield going forward.
Wells Fargo is bringing together it's master plan. The firm has spent millions in recent years integrating the former Wachovia business into it's architecture, after snapping it up during the financial crisis of 2008. Following a myriad of allegations and tense negotiations, the firm settled with Citigroup over buying the firm out from under them, and have posted impressive performance quarterly since. The firm often reflects the attitude of it's most famous shareholder, Warren Buffet, who often advocates returning capital to shareholders.
Dividend investing has been on the rise across most sectors, according to the research firm Five Star Equities. Stocks that pay dividends gained 8.3 percent last year versus 2.1 percent for the Standard & Poor's 500 Index. This year, S&P 500 companies are on pace to pay out a record $277 million in dividends, the firm said. Big banks such as JP Morgan Chase and Wells Fargo are raising their dividends, a welcome sign of recovery in a besmirched industry, and smaller publicly traded banks also are spreading the increased profits around. "There continues to be a growing trend among investors for dividend-paying stocks," Rick Weiss, bank analyst at Janney Capital Markets wrote in a first-quarter bank earnings preview.
Although the stock prices continue to be held at values far below their purchase price in many investor portfolios across the country, the slow climb back could be expedited by rising dividends.