2017 was another solid year for JPMorgan Chase (NYSE:JPM), with the banking giant seeing its stock price climb 14% over the past 12 months. Fundamentally, JPMorgan's prospects have looked strong, and the bank has led the nation in total U.S. deposits while delivering growth in its core operations despite strong competition.

Dividend investors have also shared in the success that JPMorgan has enjoyed since the financial crisis. Shareholders got not one but two dividend increases in 2017, and they're hopeful that the bank will continue to grow its payouts in the years to come. With that goal in mind, let's take a closer look to see whether JPMorgan Chase investors should expect a higher dividend in 2018.

Dividend stats on JPMorgan Chase

Current Quarterly Dividend Per Share

$0.56

Current Yield

2.3%

Number of Consecutive Years With Dividend Increases

7 years

Payout Ratio

29%

Last Increase

July 2017

Data source: Yahoo! Finance. Last increase refers to ex-dividend date.

The fall and rise of JPMorgan Chase's dividend

Like many financial institutions, JPMorgan Chase has been good to its shareholders on the dividend front. JPMorgan hasn't always focused on steady dividend growth, but a consistent yield in the 2.5% to 4% range throughout much of the past 20 years has rewarded shareholders for their patience and acted to supplement the share-price gains that the bank has produced.

But like the rest of the major banking community, JPMorgan made a huge dividend cut in 2009 in the aftermath of the financial crisis, reducing its quarterly payout by 87% to just $0.05 per share. The bank wasn't happy about that necessity, however, and it made aggressive moves to restore its dividend as quickly as possible. The Federal Reserve gave JPMorgan approval to give shareholders a substantial boost by 2011, when the bank sent its dividend higher by 400%. Impressive gains continued in 2012 and 2013, and even a slight deceleration in dividend growth still left JPMorgan paying more by 2014 than it had before the crisis.

JPM Dividend Chart

JPM Dividend data by YCharts.

2017 was a banner year for JPMorgan's dividends, as investors got a double dose of extra cash. In March, the bank raised its quarterly payout by $0.02 to $0.50 per share. An even bigger increase came after the Fed approved the bank's latest stress test results, leading to another 12% rise to its current $0.56 per share. Combined with massive stock buybacks, JPMorgan has been generous in returning capital to shareholders.

What's coming for JPMorgan's dividend in 2018?

JPMorgan has realized that shareholders see the bank's dividend as a key element of its stability. As CEO Jamie Dimon noted at a recent conference, "I speak to a lot of shareholders, [and] they want the steady dividends." The bank's CEO even said that in some cases, dividends are preferable to stock buybacks, especially when share-price valuations become extended.

Three people talking while sitting in leather chairs in the lobby of a Chase bank location.

Image source: JPMorgan Chase.

Whatever strategy JPMorgan comes up with for its dividend will still have to get the approval of the Fed and other regulators. So far, the change in leadership in the White House hasn't resulted in any dramatic reduction in regulatory oversight. That will probably leave JPMorgan in a position to make a normal-sized boost but nothing terribly extraordinary.

With plenty of capacity to increase dividends given its earnings, JPMorgan Chase will probably look to deliver a similar-sized boost that it gave investors in 2017. Whether it comes in one increase or two, JPMorgan Chase's dividend should be higher by roughly 15% by the end of 2018. That would work out to $0.64 to $0.65 per share, amply rewarding shareholders while leaving plenty of room for further business growth.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.