Recently, the largest and most complex banks in the U.S. passed the Federal Reserve's annual stress testing exercise with ease.

Stress testing puts banks through a hypothetical severe economic downturn to see how their balance sheets would fare. The goal is to make sure banks can sustain significant losses and still continue to lend during a difficult economic period. Stress testing also helps determine bank capital requirements.

Following the release of stress testing results, several banks announced dividend increases. Here are three banks planning to raise their dividends by at least 10%.

1. Wells Fargo: 16.7%

In the wake of stress test results, Wells Fargo (WFC -0.03%) announced that it plans to raise its quarterly dividend 17% from $0.30 per share to $0.35 per share, which is the biggest boost seen among the large banks.

As investors may recall, during the depths of the pandemic Wells Fargo had to slash its dividend by a whopping 80% and has been in the process of building it back up ever since. Of course, the dividend reduction had more to do with regulatory requirements at the time and not Wells Fargo's ability to pay it, so the bank has been able to rebuild it fairly quickly.

A $0.35 per share quarterly dividend brings Wells Fargo's annual dividend yield to a solid 3.3% and results in a payout ratio of roughly 30% based on consensus earnings estimates for 2023. That's right in the sweet spot of where bank payout ratios tend to fall, which is in the 25% to 40% range. Wells Fargo had been expected to increase its dividend the most because it has been sitting on a healthy amount of excess capital for some time now.  Given its strong capital position and payout ratio, I think Wells Fargo can continue to sustainably grow its dividend.

2. Goldman Sachs: 10%

Large investment bank Goldman Sachs (GS 1.79%) is planning to raise its quarterly dividend from $2.50 per share to $2.75 after a good showing at stress testing that will likely bring down its regulatory capital requirements slightly.

Goldman's dividend has grown tremendously in recent years; in 2021, the bank's quarterly dividend was only $1.25 per share. With the increase, Goldman's annual dividend yield will be roughly 3.5% and its payout ratio will be about 42% based on 2023 consensus earnings estimates.

Keep in mind that Goldman's earnings can be quite volatile because investment banking and sales and trading businesses can go through ups and downs. Currently, investment banking has been in a very difficult period and initial public offering activity has been very limited. But I feel the earnings volatility is a good reason for Goldman to boost its dividend because it can provide investors with stability in what can be an erratic business. Based on its capital levels and payout ratio, Goldman should be able to keep lifting its dividend over time.

3. Morgan Stanley: 9.6%

Big investment bank and wealth manager Morgan Stanley (MS 0.29%) also announced a nice quarterly dividend increase of $0.075 per share to $0.85. Based on its current share price, that would bring Morgan Stanley's dividend yield to nearly 4.1%. Taking into account this year's consensus earnings estimates, the bank would have a payout ratio of 56%.

Similar to Goldman, Morgan Stanley roughly doubled its quarterly dividend in 2021 and also has a nice cushion of excess capital. While its payout ratio is high for the industry, the bank's earnings are expected to rise next year once investment banking starts to pick back up, so the payout ratio will likely trend lower in the future.

Morgan Stanley should also be able to keep growing the dividend in the future. Not only does the bank already have strong levels of capital, but it also continues to generate more consistent earnings from its asset and wealth management businesses.