JPMorgan Chase Offers 43% Quarterly Dividend Hike (JPM)
By: Ned Piplovic,
With an average annual dividend growth rate that was already above 35% since the 2008 financial crisis, JPMorgan Chase & Co. (NYSE:JPM) delivered a 43% quarterly dividend hike for its final dividend distribution in 2018.
After paying a flat dividend from 2002 to 2006, the company managed to hike its annual dividend for two years in a row before the crisis. However, in the aftermath of the 2008 financial turmoil, JPM cut its annual dividend payout by a combined 98% in 2009 and 2010. After eight consecutive periods of paying a $0.50 quarterly dividend, JPMorgan Chase resumed hiking its distributions and fully recovered by 2014. That year, the total annual payout of $1.56 exceeded the $1.52 total annual dividend payout in 2008.
In addition to the strong quarterly dividend growth over the past eight years, the company supported its dividend income distributions with strong asset appreciation. Just over the past year, the company’s share price rose 24% and more than doubled over the past five years.
JPM’s share price’s 50-day moving average (MA) declined on a price pullback between March and early August 2018. However, since nearly dropping below the 200-day MA in early August, the share price and the 50-day MA reversed direction. Because both indicators have been trending higher over the past 60 days, the share price might have more room on the upside to grow and complement the rising quarterly dividend payouts for outsized total returns.
The company will distribute its next quarterly dividend on the October 31, 2008, pay date to all its shareholders of record prior to the Oct. 5 ex-dividend date.
JPMorgan Chase & Co. (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’s current 43% quarterly dividend hike raised the payout from $0.56 in the previous period to the current $0.80 quarterly dividend distribution. This new dividend amount corresponds to a $3.20 annualized payout and a 2.74% forward dividend yield, which is nearly 14% above the company’s own 2.4% five-year average yield.
Additionally, JPM’s current yield is marginally below the 2.75% average yield of only dividend paying companies in the Money Center Banks industry segment, as well as 35% higher than the 2.02% simple average of all the companies in that segment.
With the current dividend hike, the company has enhanced its annual dividend payout amount 16-fold since resuming dividend hikes in 2011. This growth pace is equivalent to an average annual growth rate of 41.4%. Even without the 2011 figures, JPM still advanced its total annual payout four-fold over the past seven years – an average growth rate of 22% per year.
Like the company’s dividend payouts, JPM’s share price also dropped significantly during the financial crisis and lost more than half of its value between mid-2007 and early 2009. After the decline, the share price rose slowly and recovered all those losses by 2013. However, the share price really took off in December 2016.
The share price continued its rapid growth into the first half of the current 12-month period but stalled a little after peaking at $118.77 on February 26, 2018. After the February peak, the share price fluctuated a little but returned to near-peak levels and closed on September 24, 2018, at $116.72 – just 1.4% below the February high. The Sept. 24 closing price was 24.6% above the 52-week low from one year earlier and 122% higher than it was five years earlier.
Over the past 12 months, JPM’s capital growth and rising dividend income rewarded its shareholders with a combined total return of 27.3%. The company’s shareholders enjoyed even higher returns of 104% and 151% over the past three and five years, respectively.
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