Within a space of two weeks, a pair of the most powerful American financial companies upped their shareholder payouts. These weren't token raises, either, with the more-modest raiser of the two hiking its dividend by almost 10%.
There's nothing like getting passively richer from one of our investments. Here's a closer look at the latest dividend raises from finance sector powerhouses JPMorgan Chase (JPM -0.11%) and American Express (AXP 1.39%).
1. JPMorgan Chase
JPMorgan Chase, one of the so-called big four U.S. banks, is a bedrock of the U.S. economy. It's a bedrock for some income investors, too, with a habit of dividend raises stretching back nearly 15 years and an above-average yield on its payout.
Keeping the increase streak alive, the bank declared a quarterly distribution of $1.15 per share before unveiling its first-quarter results -- the aforementioned near-10% dividend raise.
An increase of that size indicates management's confidence in its current and future fundamentals, and JPMorgan Chase's executives are justified in feeling that way. In the first quarter, the company's net revenue rose 9% year-over-year and net income increased 6%. These gains were powered by an impressive 16% rise in average loans, although deposits crawled up by only 2%.
In the earnings release, the bank quoted its star chief executive officer, Jamie Dimon, as saying that its very strong capital base and "peer-leading returns provide us with the capacity and flexibility to both reinvest for growth and maintain an attractive capital-return profile, without compromising our fortress balance sheet."
Note what he said about the "attractive capital-return profile." We can take that to mean: "We're going to continue raising our payout as long as we keep posting these kinds of results." The company's talented management and the favorable economy should support this.
The bank's freshly increased payout will be dispensed on April 30 to shareholders of record as of April 5. At the most recent closing stock price, the new amount would yield 2.5%.
2. American Express
Outdoing JPMorgan Chase in the dividend-raise race was payment card mainstay American Express. In early March, the company's board authorized a boost of 17%, going from a quarterly payout of $0.60 per share to $0.70 per share.
AmEx is something like a bank in that it's not only a credit card brand and issuer, but it also extends credit to the cardholders and holds the loans on its books. So we can say it is an active and busy lender, with the advantage that it can glean much information about its borrowers by analyzing the reams of data behind their spending practices.
As 2024 got into gear, AmEx published its fourth-quarter and full-year 2023 results. The latter showed that net revenue increased by 14% over 2022, quite admirable given the company's age and size, while net income rose 11%. Net margins are chunky for what's essentially a lending business: around 14% both last year and in 2022.
The company will soon publish its first-quarter figures, and the analysts tracking the stock expect some solid performance. Collectively, according to data compiled by Yahoo! Finance, they're anticipating a very meaty 35% rise in per-share net income, on the back of a 21% increase on the top line.
AmEx's increased quarterly distribution is set for payment on May 10 to investors of record as of April 5. Although the dividend raise was higher than JPMorgan's in terms of percentage, the new amount has a comparatively and notably lower yield: 1.3% at the current stock price.
