JPMorgan Chase (JPM 0.15%) has enjoyed a strong 2019, with the big bank's stock jumping more than 30% so far this year as of the beginning of December. An about-face in the Federal Reserve's monetary policy earlier this year helped give investors more confidence that JPMorgan might not have to deal with the consequences of short-term interest rates being as high or higher than longer-term rates. Yet more recently, worries about the economy have sent long-term rates down again, and that is once more raising some of the concerns that weighed on JPMorgan toward the end of 2018.
JPMorgan has been a favorite among income investors for a long time, and despite the huge disruptions that the financial crisis caused, the big bank has done a good job of bouncing back from adversity over the past decade. Dividend increases have played a key role in that recovery, and JPMorgan shareholders want to know whether they can expect more of the same in 2020.
Dividend stats on JPMorgan Chase
|
Metric |
Value |
|---|---|
|
Current quarterly dividend per share |
$0.90 |
|
Current yield |
2.7% |
|
Number of consecutive years with dividend increases |
9 years |
|
Payout ratio |
33% |
|
Last increase |
October 2019 |
Data source: Yahoo! Finance. Last increase refers to ex-dividend date.
Returning to its dividend glory
Dividend investors long relied on JPMorgan Chase for consistent and growing dividend income. Throughout much of the 2000s, the bank kept its quarterly dividend level, with boosts annually from 2000 to 2002 and in 2007 and 2008. However, 2009 brought a painful dividend cut, and after having paid $1.52 per share in dividends just two years before, 2010 saw JPMorgan pay out just $0.20 per share.
Yet JPMorgan didn't waste any time getting back to working toward restoring its former dividend payout. The company managed to pay $0.80 per share in dividends in 2011, and JPMorgan met its goal of exceeding its previous dividend high-water mark in 2014.
JPM Dividend data by YCharts.
Since then, the bank's dividend growth has accelerated, culminating in a massive 43% dividend hike in late 2018 and an additional 12.5% boost just a couple months ago. Now, JPMorgan is on pace to pay out more than double its best dividend payments prior to the financial crisis.
What's next for JPMorgan's dividend in 2020?
With the bank having just increased its payout, investors shouldn't expect another dividend hike from JPMorgan until late next year. JPMorgan still goes through the annual process of submitting capital spending plans to the Federal Reserve, and those plans typically include not only a dividend increase but also proposals to use significant amounts of capital to buy back stock. Regulators are comfortable with the idea that dividend payments are a baseline that JPMorgan will plan to sustain year in and year out, while money spent on stock buybacks can more easily rise or fall as financial conditions change.
Image source: JPMorgan Chase.
From a fundamental perspective, JPMorgan looks strong. The bank has boosted its deposit base and loan portfolio significantly, with $2.77 trillion in total assets as of the end of the third quarter of 2019. Consumer banking has been particularly strong for JPMorgan Chase, with credit cards, client investments, and mobile banking showing sizable gains over the past year. That said, macroeconomic uncertainty has some worried about the bank stock, especially as trade disputes between the U.S. and other global economic powers continue.
With ample earnings and a U.S. economy that's still growing, investors can expect that JPMorgan will likely keep boosting its dividend by similar amounts to what it did in 2019. Boosting the payout to an even $1 per share each quarter would be an 11% rise and would extend the bank's streak to an even decade -- marking yet another milestone in JPMorgan's recovery.
