The stock market continued to see some crosscurrents on Tuesday, but the overall mood was positive. As of 11:30 a.m. EDT, the Dow Jones Industrial Average (^DJI -1.24%) was up 128 points to 34,411, recovering a significant part of what it lost on Monday. Meanwhile, the S&P 500 (^GSPC -1.46%) climbed further into record territory by rising six points to 4,297. The Nasdaq Composite (^IXIC -1.62%) had to settle for a loss of 10 points to 14,491 after hitting its own record a day ago.

Growth investors have been in the ascendancy for years now, especially after the huge run in high-growth stocks that started in early 2020. That's left many income-seeking dividend investors feeling left out. But on Tuesday, key dividend-paying players in the financial sector announced their plans to boost their dividend payments, and that helped remind investors that growth isn't the only way to invest.

Person celebrating on couch with laptop and lots of cash.

Image source: Getty Images.

Big moves from big banks

The catalyst for dividend-boosting activity from some of the nation's largest financial institutions came from the most recent round of stress tests from the Federal Reserve. The Fed gave most banks the go-ahead to implement their capital plans. Many financial companies eased off on reserves after the anticipated recession following the pandemic proved less severe than feared, and that opened the door to more generous returns of capital to shareholders.

Morgan Stanley (MS -0.75%) was arguably the most noteworthy of major Wall Street institutions with its capital move. The investment-banking specialist plans to double its quarterly dividend to $0.70 per share. That will take the bank's yield above the 3% mark, and Morgan Stanley also anticipates making greater share repurchases beginning in July.

The move comes largely because Morgan Stanley had accumulated excess capital for a long time. Now that conditions in the industry look more favorable, having that much cash stashed away seems overly conservative.

Goldman Sachs (GS -2.01%) also made a sizable move. The Morgan Stanley rival will increase its quarterly dividend to $2 per share, pushing its dividend yield over 2%. That's a 60% rise, compared to its previous $1.25 per-share quarterly payout, and reflects similar success for Goldman in capitalizing on investment-banking opportunities.

Finally, Wells Fargo (WFC -0.39%) doubled its quarterly dividend and now expects to pay $0.20 per share. It's important to realize, though, that Wells was paying a much lower payout than its peers. Even with the big move higher, the stock yields just 1.7%. However, Wells expects to buy back $18 billion in stock, or roughly 10% of its market capitalization.

Smaller moves from other banks

Most other banks also boosted their payouts, albeit not to the same extent. Bank of America (BAC -1.54%) said it would increase its dividend by 17% to $0.21 per share, working out to about a 4% yield. JPMorgan Chase (JPM -6.47%) will award a modest 11% rise, bringing the payout to an even $1 per share each quarter but leaving the yield below the 3% mark.

Citigroup (C -1.70%) got some bad news. One of its required capital ratios rose from year-ago levels, and that will prevent Citi from making huge stock buybacks and likely keep its dividend at $0.51 per share each quarter. That yield is reasonably healthy at nearly 3% but is still a disappointment.

Income wherever you can get it

With interest rates remaining low, investors who need income have had to scurry to figure out where to get the cash they need. Higher dividends are a boon for income investors, and what we're seeing from bank stocks could well be just the beginning of a new trend supporting higher dividend payments across the market. That could provide another leg up in the current bull market if dividend-hungry investors feel more confident putting money to work in stocks.