JPMorgan Chase Is Averaging 35%-Plus Annual Dividend Growth Rates (JPM)
By: Ned Piplovic,
Eight years after the financial crisis, JPMorgan Chase & Company seems to be forging full steam ahead, averaging 35%-plus annual dividend growth rates and rising dividends at nearly 25% annually.
After a few years of paying flat dividends leading up to the financial crisis and cutting its annual dividend payout by a combined 98% in 2009 and 2010, JPMorgan Chase’s annual dividend has fully recovered and has exceeded the annual payment amount from 2008 since 2014.
Additionally, the company’s share price rose more than 25% over the past 12 months and combined with the dividend distribution for a one-year total return of almost 30%. The company’s next ex-dividend date is fixed for January 4, 2018, and the pay date will follow just a few weeks later, on January 31, 2018.
JPMorgan Chase & Company (NYSE:JPM)
With origins tracing back to 1799, New York-based JPMorgan Chase & Co. operates as a financial services company through four business units – Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking and Asset & Wealth Management segments. Through these business segments, the company offers comprehensive financial services for private customers, corporations, municipalities, financial institutions and nonprofit entities services. Among the company’s services are deposit and investment products, investment banking, treasury services, securities services, lending, investment and wealth management and brokerage services.
The company hiked its quarterly dividend distribution last period and the current annualized payout of $2.24 for 2018 is 9.8% higher than the $2.04 actual dividend paid in 2017. The current quarterly distribution is $0.56 and yields 2.1%. The dividend yield is slightly suppressed by the company’s rapidly advancing share price.
The company’s current 2.1% yield is more than 40% lower than the average of the entire financial sector. However, real estate investment trusts (REITs) and master limited partnerships (MLPs) tend to drive the sector’s average yield higher. Compared to the 2.07% average yield of its peers in the Money Center Banks segment, JPMorgan Chase’s 2.1% yield is much more favorable.
Even with paying flat $1.32 annual dividends between 2002 and 2006, the company managed to grow its annual payout 64% in just a decade from $0.927 in 1998 to $1.52 in 2008. However, after a 65% cut in 2009 and a 96% cut in 2010, the annual payout was down to less than 2% of its value from just two years earlier.
In 2011, JPMorgan Chase started rebuilding its dividend payouts. The total annual amount reached and exceeded the 2008 total payout by 2014 and continued to enhance its annual dividend every year afterwards. Since resuming the annual dividend hikes, the company has boosted its total annual distribution at an average growth rate of 35.3% per year. The current annualized payout of $2.24 is more than 11-fold higher than the $0.20 annual dividend that the company paid in 2010.
Just like the dividend dropped during the 2008-2009 financial crisis, the company’s share price lost more than half of its value between mid-2007 and early 2009. The share price slowly recovered and was back to pre-crisis levels by 2013. However, the accelerated share-price growth happened over the past 18 months.
The share price stalled a little in the first half of the trailing 12-month period and dropped 3.8% from $85.43 on December 20, 2016, to its 52-week low of 82.15 on May 31, 2017. However, after bottoming out at the end of May 2017, the share price rose more than 30% with only minor deviations towards its 52-week high of $106.96, which it reached on December 18, 2017.
The company’s shareholders enjoyed the combined benefit of steady cash income and asset appreciation as a 29% total return on investment over the past 12 months, with three-year and five-year total returns coming in at 84% and 164%, respectively.
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