Morgan Stanley Boosts Quarterly Dividend 20% (MS)
By: Ned Piplovic,
After cutting its quarterly dividend more than 80% in 2009 and paying the same low $0.05 amount for 20 consecutive quarters, Morgan Stanley (NYSE: MS) has hiked its annual distribution for the past five consecutive years.
The upcoming quarterly dividend payout will represent a 20% increase over prior levels and a six-fold increase from the $0.20 annual dividend paid out in 2013.
In addition to a double-digit dividend increase, technical indicators are hinting at a possible sustained uptrend over the near term. Morgan Stanley has already seen its share price advance more than 80% over the past five years.
To take advantage of the increased payouts, investors need to add Morgan Stanley shares to their portfolio prior to the upcoming July 30, 2018 ex-dividend date. The next quarterly dividend payment will be distributed to all shareholders of record on August 15, 2018.
Morgan Stanley (NYSE:MS)
Headquartered in New York, New York and founded in 1924, Morgan Stanley is a financial holding company that provides various financial products and services to corporations, governments, financial institutions and individuals. The company operates through three business segments — Institutional Securities, Wealth Management and Investment Management. The Institutional Securities segment offers capital raising and financial advisory services, as well as advice on mergers and acquisitions, restructurings, real estate and project finance. This segment also provides sales and trading services, including sales, financing and fixed income products consisting of foreign exchange and commodities. Additionally, this segment offers prime brokerage services, corporate loans, commercial and residential mortgage lending, asset-backed lending, financing for equities and commodities, as well as investment and research services. The Wealth Management segment offers various financial services and solutions covering brokerage, investment advisory, financial and wealth planning services. The Investment Management segment provides various investment products including equity, fixed income, liquidity and defined benefit/defined contribution plans.
Morgan Stanley’s upcoming quarterly dividend payout will see the distribution increase from the prior quarter’s $0.25 per share to $0.30 per share. On an annual basis, Morgan Stanley will now pay $1.20 per share instead of the previous $1.00 per share amount, which translates to a 2.4% forward dividend yield. This is 50% higher than the company’s 1.6% average yield over the past five years. Morgan Stanley’s current yield is the fifth highest among its peers in the National Investment Brokerage industry segment and outperforms the segment’s 1.74% average yield by 36.4%.
Since resuming dividend hikes in 2013, Morgan Stanley has grown its total annual dividend 500%, going from $0.20 in 2013 to the current annualized dividend distribution of $1.20. This level of progress is equivalent to an average growth rate of more than 43% per year. While more recent growth rates have declined slightly, the five-year average is still nearly 40% per year, and the average rate over the past three years is only slightly below 31%.
In terms of share price appreciation, Morgan Stanley has enjoyed relatively stable growth over the past five years. In the last 12 months, MS shares reached a 52-week low of $44.01 on September 8, 2017. After that, MS gained almost 34% before reaching a 52-week high of $58.91 on March 12, 2018, only to pull back more than 15% in the next three to four months. Since the beginning of July, though, the share price has advanced 7.5% and closed on July 19, 2018 at $56.20, which was 7.7% higher than it was one year earlier and 14.1% above the 52-week low from September 2017.
Rising dividends and asset appreciation over the last year combined to reward Morgan Stanley’s shareholders with a total return of nearly 15%, and a 32.5% total return over three years. Over the past five years, the shareholders nearly doubled their investment, seeing a 95% total return.
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