Just days after rumors flew that JPMorgan Chase
Unlike the dividend cuts by Citigroup
In other words, ax the dividend -- which will bolster common equity by about $5 billion a year -- and get the Treasury, Congress, and the media's nonstop tar-and-feathering off its back as soon as possible. While acknowledging the dismal state of the banking industry, Dimon's moves look far more strategic than frantic.
For investors, the prospect of repaying Troubled Asset Relief Program funds and going back to business as usual surely outweighs the $0.38 per-share dividend the company had been paying. The dividend had equated to a nice 7.8% yield, but let's be honest: Investors' main concern these days is whether a bank will be able to open its doors the next morning. The allure of a fat dividend loses its luster when shares can fall 50% in the time it takes to log on to your brokerage account. Not surprisingly, shares hardly budged this morning -- probably a balanced reflection of lost income against the prospect of a TARP-less future.
With JPMorgan ditching the dividend game, the only major bank holding onto a significant payout is Wells Fargo
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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. JPMorgan Chase is a Motley Fool Income Investor recommendation. The Motley Fool is investors writing for investors.