BB&T Bank Hikes Quarterly Dividend 13% (BBT)
By: Ned Piplovic,
BB&T Corporation (NYSE: BBT) – a well-known U.S. financial services holding company – has boosted its annual dividend for the past eight consecutive years and is set to increase its quarterly dividend for the upcoming payout by more than 13%.
Currently paying a 2.8% yield, which outperforms the average yield of the Mid-Atlantic Regional Banks market segment by more than 50%, BB&T has increased its dividend payment 18 times in the past two decades. In addition to this impressive streak, the company also has rewarded its investors with steady, double-digit-percentage asset appreciation over the past year.
BB&T offers a solid portfolio of traditional banking products and limited exposure to risky exotic financial investments. Investors looking for a safe way to diversify their portfolio and add a company with a strong dividend payout record may want to conduct their research and assume a long position in the stock prior to the next ex-dividend date on May 10, 2018. The pay date for the dividend will be on June 1, 2018, which is a little longer than the two weeks that normally separates these two important dates.
BB&T Corporation (NYSE:BBT)
Based in Winston-Salem, North Carolina and founded in 1872, the BB&T Corporation operates as a financial holding company that provides various banking and trust services for small and mid-size businesses, public agencies, local governments and individuals. The bank operates through six business segments — Community Banking, Residential Mortgage Banking, Dealer Financial Services, Specialized Lending, Insurance Services and Financial Services. As of December 2017, the bank operated approximately 2,200 locations in 15 states.
BB&T Corporation started paying dividends to its shareholders in 1934. Prior to the 2008-2009 financial crisis, the quarterly payment had gone as high as $0.47 per share, or $1.88 every year. However, the company reduced its quarterly dividend payout 68% in the second quarter of 2009, going from the aforementioned $0.47 per share to a $0.15 distribution the following period.
Thankfully, BB&T reverted to boosting its annual dividends every year, and has done so since 2011. With the next increase coming later this month, the annual dividend will have risen 150% since its 2010 levels. Even with the significant dividend cut in 2009, the company still managed to maintain an average growth rate of 7.5% per year over the past two decades and enhance its total annual payout amount four-fold since 1998.
The upcoming dividend distribution will increase the quarterly payment 13.6% from the $0.33 per share in the previous quarter to the current $0.375 amount, which converts to a $1.50 a year. Normally, BB&T has increased its dividend in $0.03 increments over the past several years, so the current boost of $0.045 exceeds the company’s recent trend.
The upcoming dividend hike, combined with a small share price decrease over the past three months, has caused the company’s dividend yield to rise approximately 8%, from 2.6% to the current 2.8% yield. While this higher yield still lags the 3.27% average yield of the overall Financial sector by 16%, it compares favorably with the average yields of BB&T’s regional bank peers.
BB&T’s share price declined almost 5% at the onset of the trailing 12-month period, falling from $43 to a 52-week low of $41 on May 31, 2017. After bottoming out at the end of May, the share price embarked on an uptrend with some volatility along the way, advancing 34% before topping out around the 52-week high of $56 in March 2018. Since the mid-March peak, the share price experienced one significant pullback of almost 10% over just two days in late March, but the stock has recovered, albeit slowly, and closed on May 1, 2018 at $53.07. This closing price was 23% higher than one-year earlier and 28.4% above the 52-week low from the end of May 2017, as well as 70% higher than five years ago.
Combined with BB&T’s quarterly payments, investors have seen a total return of 25.7% over one year and almost 50% over three years. Long-term investors are approaching a triple-digit return should the stock continue to climb higher.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.