Just after announcing better-than-expected fourth-quarter results, the board of directors at BB&T Corporation (BBT) declared a 15% hike in the quarterly cash dividend to 23 cents. The dividend is payable on Mar 1 to shareholders of record as of Feb 8.
The dividend hike/payout is consistent with its 2012 capital plan, which was approved by the Federal Reserve. In Mar 2012, following the release of the Fed’s stress test results, the company received the green signal to hike its quarterly dividend by 25% to 20 cents per share.
BB&T paid total common dividends of 20 cents during the fourth quarter of 2012, which resulted in a dividend payout ratio of 28%. Though the company did not repurchase any shares in the quarter, it has nearly 700 million shares left to be repurchased as of Dec 31, 2012.
BB&T’s fourth-quarter 2012 earnings came in a penny ahead of the Zacks Consensus Estimate. Growth in revenue and a fall in operating expenses, partially offset by slightly higher provision for credit losses, were mainly responsible for the improvement in the quarterly results. Further, overall credit quality recovered, while capital as well as profitability ratios were stable. Accelerating growth in loans and low-cost deposits were impressive as well.
Among other companies in the financial sector that have hiked dividends include Wells Fargo & Company (WFC), Comerica Incorporated (CMA) and BlackRock Inc. (BLK). The dividend hikes reflect the strong liquidity of these companies. Moreover, we believe that the strong liquidity levels will help these companies to successfully clear Fed’s Stress test.
Currently, BB&T carries a Zacks Rank #3 (Hold).