SunTrust Banks Boosts Quarterly Dividend Payout 25% (STI)

dividend yield        ex-dividend date                     dividend payout ratio                             dividend

SunTrust Banks, Inc. (NYSE:STI) extended its streak of seven consecutive annual dividend boosts to eight years with a 25% hike to its upcoming quarterly dividend payout for the third quarter distribution.

In addition to the last eight consecutive years, the company has enhanced its annual dividend distribution 27 times in the past three decades, or 90% of the time. The bank was not immune to the negative effects of the 2008 financial crisis and first decreased its quarterly dividend payout 30% from $0.77 in the third quarter of 2008 to a $0.54 payout for the last period of the year. For the first quarter of 2009, the company all but eliminated its quarterly dividend distributions with a $0.01 payout amount. The SunTrust Bank continued distributing this quarterly dividend payout amount for another nine consecutive quarters before resuming dividend hikes in the third quarter of 2011.

Similar to the quarterly dividend payout decline, the company’s share price lost 87% during the financial crisis but has risen steadily and gained 315% since March 2009. Additionally, all the moving average indicators as of mid-August 2018 suggest that the current share price uptrend could extend over the near term.

Furthermore, the bank expanded its Private Wealth Management services offering recently with the opening of two new offices in Cleveland and Cincinnati, Ohio. These two new offices will expand the bank’s commercial banking services in the state, as well as northern Kentucky. The company will distribute its next quarterly dividend payout on the September 17, 2018, pay date to all its shareholders of record before the August 30, 2018, ex-dividend date.

SunTrust Banks, Inc. (NYSE:STI)

Headquartered in Atlanta, Georgia, and founded in 1891, SunTrust Banks, Inc. operates as the holding company for SunTrust Bank, which conducts business primarily in the Southeast and Mid-Atlantic regions of the United States. Through its two business segments — Consumer and Wholesale — SunTrust Bank provides various financial services for consumers, businesses, corporations and institutions. The Consumer segment provides standard demand deposit services, lines of credit, lending products, credit cards, professional investment advisory services and trust services. This segment also offers residential mortgage products in the secondary market as well as discount, online and full-service brokerage products.

The Wholesale segment provides capital markets solutions, lease financing solutions, cash management services, auto dealer financing solutions, construction and real estate financing, as well as tailored financing and equity investment solutions. As of June 30, 2018, SunTrust had total assets of more than $200 billion and total deposits in excess of $160 billion. The company provides its services through a network of nearly 1,300 full-service banking offices in Florida, Georgia, Virginia, North Carolina, Tennessee, Maryland, South Carolina and the District of Columbia.

The company enhanced its quarterly dividend payout 25% from the previous period’s $0.40 distribution to the current $0.50 amount. This new amount is equivalent to a $2.00 annualized payment and a 2.7% forward dividend yield, which outperforms the company’s own 1.9% average yield over the past five years by more than 40%. While STI’s current yield trails the 2.94% average yield of the entire Financials sector by 8.75%, the 2.7% current yield is more than 50% above the 1.77% simple average yield of all the companies in the Money Center Banks industry segment. Furthermore, SunTrust Banks’ current yield is also nearly 10% higher than the 2.44% average yield of the segment’s dividend-paying companies.

Since resuming dividend hikes in 2011, the company has managed to boost its total annual dividend amount 50-fold, which translates to a 63% average annual growth rate over the past eight years. However, since the company distributed a minimal quarterly dividend payout of $0.01 in 2010, a comparison against the $0.20 annualized dividend payout from 2011 is a better indicator of dividend growth. The total annual dividend amount has advanced 10-fold over the past seven years, which still corresponds to an average growth rate of nearly 40% per year.

The share price dipped 6% during the first three weeks of the trailing 12-month period towards its 52-week low of $52.30 on September 7, 2017. However, after bottoming out in early September 2018, the share price embarked on a steady uptrend and ascended more than 42% before closing on August 21, 2018, at its 52-week high of $74.55. This closing price was 33.7% higher than one year earlier and more than 130% above its level from five years ago.

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