Tag: U.S. Bancorp

Sei Investments Co. Increases Holdings in U.S. Bancorp (NYSE:USB)

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Sei Investments Co. grew its holdings in U.S. Bancorp (NYSE:USB – Free Report) by 5.1% during the second quarter, HoldingsChannel reports. The fund owned 1,852,257 shares of the financial services provider’s stock after purchasing an additional 90,691 shares during the period. Sei Investments Co.’s holdings in U.S. Bancorp were worth $73,535,000 as of its most recent SEC filing.

Several other hedge funds and other institutional investors have also made changes to their positions in USB. Redwood Wealth Management Group LLC purchased a new position in U.S. Bancorp in the second quarter valued at approximately $25,000. Financial Synergies Wealth Advisors Inc. acquired a new position in shares of U.S. Bancorp in the 1st quarter valued at $30,000. LRI Investments LLC purchased a new position in shares of U.S. Bancorp in the 1st quarter valued at $31,000. Eagle Bay Advisors LLC raised its stake in U.S. Bancorp by 93.2% during the 1st quarter. Eagle Bay Advisors LLC now owns 686 shares of the financial services provider’s stock worth $31,000 after acquiring an additional 331 shares in the last quarter. Finally, 1620 Investment Advisors Inc. purchased a new stake in U.S. Bancorp in the second quarter valued at $30,000. Institutional investors and hedge funds own 77.60% of the company’s stock.

U.S. Bancorp Trading Down 1.0 %

NYSE:USB opened at $46.01 on Friday. U.S. Bancorp has a 1 year low of $30.47 and a 1 year high of $47.31. The company has a debt-to-equity ratio of 1.05, a quick ratio of 0.80 and a current ratio of 0.81. The stock has a fifty day moving average price of $44.39 and a two-hundred day moving average price of $42.31. The stock has a market capitalization of $71.80 billion, a price-to-earnings ratio of 15.24, a PEG ratio of 4.36 and a beta of 1.04.

U.S. Bancorp (NYSE:USB – Get Free Report) last released its quarterly earnings data on Wednesday, July 17th. The financial services provider reported $0.98 EPS for the quarter, topping analysts’ consensus estimates of $0.94 by $0.04. U.S. Bancorp had a net margin of 12.55% and a return on equity of 13.34%. The firm had revenue of $6.87 billion for the quarter, compared to the consensus estimate of $6.81 billion. During the same quarter in the previous year, the firm earned $1.12 earnings per share. The firm’s revenue was down 4.3% on a year-over-year basis. As a group, sell-side analysts anticipate that U.S. Bancorp will post 3.87 earnings per share for the current fiscal year.

U.S. Bancorp announced that its board has approved a stock repurchase plan on Thursday, September 12th that allows the company to repurchase $5.00 billion in outstanding shares. This repurchase authorization allows the financial services provider to purchase up to 7% of its stock through open market purchases. Stock repurchase plans are usually a sign that the company’s board of directors believes its shares are undervalued.

U.S. Bancorp Increases Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Tuesday, October 15th. Investors of record on Monday, September 30th will be paid a $0.50 dividend. This is an increase from U.S. Bancorp’s previous quarterly dividend of $0.49. This represents a $2.00 annualized dividend and a yield of 4.35%. The ex-dividend date of this dividend is Monday, September 30th. U.S. Bancorp’s dividend payout ratio (DPR) is presently 66.23%.

Insider Buying and Selling

In other news, Director Aleem Gillani purchased 10,000 shares of the company’s stock in a transaction dated Thursday, July 18th. The stock was acquired at an average price of $44.99 per share, for a total transaction of $449,900.00. Following the completion of the transaction, the director now directly owns 10,000 shares in the company, valued at approximately $449,900. The acquisition was disclosed in a document filed with the SEC, which is accessible through this link. 0.23% of the stock is currently owned by insiders.

Analyst Ratings Changes

USB has been the topic of a number of research analyst reports. UBS Group lifted their target price on U.S. Bancorp from $43.00 to $46.00 and gave the stock a “neutral” rating in a research report on Thursday, July 18th. Citigroup lifted their price target on U.S. Bancorp from $45.00 to $49.00 and gave the stock a “neutral” rating in a research report on Thursday, July 18th. JPMorgan Chase & Co. downgraded U.S. Bancorp from an “overweight” rating to a “neutral” rating and set a $43.50 price objective for the company. in a report on Thursday, June 27th. StockNews.com raised shares of U.S. Bancorp from a “sell” rating to a “hold” rating in a report on Wednesday, July 17th. Finally, Wells Fargo & Company increased their price target on shares of U.S. Bancorp from $48.00 to $52.00 and gave the stock an “overweight” rating in a research note on Thursday, July 18th. Thirteen investment analysts have rated the stock with a hold rating and seven have assigned a buy rating to the company’s stock. According to MarketBeat.com, the company currently has an average rating of “Hold” and an average target price of $48.18.

Get Our Latest Analysis on U.S. Bancorp

About U.S. Bancorp

(Free Report)

U.S. Bancorp, a financial services holding company, provides various financial services to individuals, businesses, institutional organizations, governmental entities, and other financial institutions in the United States. It operates through Wealth, Corporate, Commercial and Institutional Banking; Consumer and Business Banking; Payment Services; and Treasury and Corporate Support segments.

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ABMN Staff

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September 22, 2024
U.S. Bank developing AI tools to meet SMB demands

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U.S. Bank is developing AI and automation-driven solutions to improve productivity for its small and medium-sized business clients. Nearly 71% of U.S.-based SMBs think that digital solutions including AI and financial management tools can make their jobs easier, according to the U.S. Bank 2024 Small Business Perspective survey published on Aug. 26. U.S. Bank surveyed […]

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Vaidik Trivedi

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September 3, 2024
Transactions: U.S. Bank joins forces with Billtrust for B2B payments | Bank Automation News

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U.S. Bank is working with payments service provider Billtrust to provide business customers with an accounts receivable solution. The platform, called Advance Receivables, will help automate invoicing and payments along with providing custom methods for collection of invoices, Alberto Casas, head of product for U.S. Bank global treasury management, told Bank Automation News. On the […]

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Vaidik Trivedi

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August 7, 2024
U.S. Bancorp splits new president’s former duties between two executives

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U.S. Bancorp in Minneapolis has promoted two longtime executives into expanded roles leading two areas of the company’s wealth, corporate, commercial and institutional banking division. Stephen Philipson and Felicia La Forgia will continue to report to U.S. Bancorp President Gunjan Kedia, the company said.
JHVEPhoto – stock.adobe.com

One month after U.S. Bancorp promoted Gunjan Kedia to the role of company president, the Minneapolis-based firm has split her former day-to-day responsibilities between two longtime executives.

Stephen Philipson is now leading all of the product businesses within U.S. Bancorp’s wealth, corporate, commercial and institutional banking division, the company said in a press release. Meanwhile, Felicia La Forgia will oversee a newly created unit within the same division called the Institutional Client Group, which will focus on distributing resources to institutional clients.

Kedia had been running the wealth, corporate, commercial and institutional banking division for a little more than a year when she was promoted last month to president, a role that potentially sets her up to succeed CEO Andy Cecere. While Cecere has given no indication that he’s ready to retire, both he and his most immediate predecessor held the role of president before they became CEO.

Philipson, who joined U.S. Bancorp 15 years ago, most recently oversaw the global markets and specialized finance segment within the wealth, corporate, commercial and institutional banking unit. He joined the bank in 2009 as the deputy head of high grade fixed income after having worked at Wells Fargo, Wachovia Securities and Morgan Stanley, according to his LinkedIn profile.

He will continue to sit on U.S. Bancorp’s 16-member managing committee, the company said.

La Forgia, who has been with U.S. Bancorp since 2008, was most recently the head of corporate banking at U.S. Bank, the banking subsidiary of U.S. Bancorp. She was also group head of the bank’s oil and gas, retail and apparel and utilities businesses, the company said.

La Forgia previously worked at WestLB, the German bank that was broken up in 2012, and Bank of New York Mellon, her LinkedIn profile shows. In 2020, she was part of a group of U.S. Bancorp women executives that was named one of American Banker’s Most Powerful Women in Banking teams.

In a profile published by U.S. Bancorp in 2021, La Forgia called banking “a people business.“

“We want to be the go-to bank, the one clients know they can rely on to solve problems they didn’t even know they had and help them reach goals they couldn’t have imagined possible,” she said in the article.

Both Philipson and La Forgia will continue to report directly to Kedia. As president, in addition to overseeing wealth, corporate, commercial and institutional banking, Kedia also oversees U.S. Bancorp’s other two business lines: payment services and consumer and business banking.

Philipson is “known for his deep product knowledge and offering innovative solutions,” and in his new role will elevate “relationship channels into a stronger and more cohesive unit,” Kedia said.

And La Forgia “will drive consistency and excellence in regional and sector coverage across all our corporate, commercial and institutional clients,” Kedia said.

The wealth, corporate, commercial and institutional banking division contributes 37% of U.S. Bancorp’s total net revenue, the same percentage as consumer and business banking, according to a presentation that U.S. Bancorp prepared for a conference last month.

The division covers a broad list of segments, including wealth management, asset management, capital markets, global fund services, corporate banking, commercial banking and commercial real estate.

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Allissa Kline

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June 5, 2024
U.S. Bancorp (NYSE:USB) Shares Sold by Vontobel Holding Ltd.

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Vontobel Holding Ltd. cut its stake in shares of U.S. Bancorp (NYSE:USB – Free Report) by 16.4% in the 4th quarter, according to the company in its most recent disclosure with the Securities and Exchange Commission (SEC). The firm owned 47,952 shares of the financial services provider’s stock after selling 9,383 shares during the quarter. Vontobel Holding Ltd.’s holdings in U.S. Bancorp were worth $2,075,000 as of its most recent SEC filing.

Several other hedge funds have also recently modified their holdings of the stock. CGC Financial Services LLC purchased a new position in U.S. Bancorp in the fourth quarter worth $25,000. BKM Wealth Management LLC purchased a new position in U.S. Bancorp in the fourth quarter worth $26,000. Planned Solutions Inc. purchased a new position in U.S. Bancorp in the fourth quarter worth $27,000. Legacy Financial Group LLC purchased a new position in U.S. Bancorp in the third quarter worth $30,000. Finally, Compass Wealth Management LLC purchased a new position in U.S. Bancorp in the fourth quarter worth $39,000. 77.60% of the stock is owned by institutional investors and hedge funds.

Analyst Upgrades and Downgrades

USB has been the subject of several research analyst reports. Evercore ISI increased their price objective on U.S. Bancorp from $46.00 to $48.00 and gave the stock an “in-line” rating in a research report on Thursday, March 28th. Piper Sandler restated a “neutral” rating on shares of U.S. Bancorp in a research report on Friday, January 26th. StockNews.com cut U.S. Bancorp from a “hold” rating to a “sell” rating in a research report on Tuesday, February 20th. Jefferies Financial Group raised their price target on U.S. Bancorp from $44.00 to $46.00 and gave the company a “hold” rating in a research report on Monday, April 8th. Finally, Compass Point upgraded U.S. Bancorp from a “neutral” rating to a “buy” rating and raised their price target for the company from $46.00 to $49.00 in a research report on Friday, March 22nd. One equities research analyst has rated the stock with a sell rating, fourteen have given a hold rating and nine have assigned a buy rating to the stock. According to data from MarketBeat.com, the stock currently has a consensus rating of “Hold” and a consensus target price of $46.91.

Read Our Latest Stock Analysis on U.S. Bancorp

U.S. Bancorp Stock Down 0.2 %

Shares of NYSE:USB opened at $39.44 on Friday. The stock’s 50-day moving average price is $42.31 and its two-hundred day moving average price is $39.72. The company has a current ratio of 0.81, a quick ratio of 0.81 and a debt-to-equity ratio of 1.05. U.S. Bancorp has a 12-month low of $27.27 and a 12-month high of $45.85. The firm has a market cap of $61.45 billion, a price-to-earnings ratio of 12.02, a PEG ratio of 2.12 and a beta of 1.05.

U.S. Bancorp (NYSE:USB – Get Free Report) last issued its quarterly earnings results on Wednesday, April 17th. The financial services provider reported $0.90 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.89 by $0.01. The firm had revenue of $6.72 billion for the quarter, compared to analyst estimates of $6.71 billion. U.S. Bancorp had a return on equity of 14.89% and a net margin of 13.36%. The firm’s quarterly revenue was down 6.4% on a year-over-year basis. During the same period last year, the company earned $1.16 EPS. On average, research analysts forecast that U.S. Bancorp will post 3.87 EPS for the current year.

U.S. Bancorp Dividend Announcement

The company also recently disclosed a quarterly dividend, which was paid on Monday, April 15th. Stockholders of record on Friday, March 29th were paid a $0.49 dividend. This represents a $1.96 annualized dividend and a dividend yield of 4.97%. The ex-dividend date was Wednesday, March 27th. U.S. Bancorp’s dividend payout ratio is currently 59.76%.

Insider Activity

In other news, insider Terrance R. Dolan sold 26,583 shares of U.S. Bancorp stock in a transaction dated Tuesday, January 30th. The stock was sold at an average price of $43.37, for a total value of $1,152,904.71. Following the transaction, the insider now directly owns 144,236 shares of the company’s stock, valued at approximately $6,255,515.32. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is accessible through the SEC website. In related news, EVP James L. Chosy sold 21,582 shares of the business’s stock in a transaction that occurred on Friday, February 16th. The stock was sold at an average price of $41.47, for a total transaction of $895,005.54. Following the transaction, the executive vice president now directly owns 164,880 shares of the company’s stock, valued at approximately $6,837,573.60. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this hyperlink. Also, insider Terrance R. Dolan sold 26,583 shares of the business’s stock in a transaction that occurred on Tuesday, January 30th. The stock was sold at an average price of $43.37, for a total value of $1,152,904.71. Following the transaction, the insider now directly owns 144,236 shares in the company, valued at $6,255,515.32. The disclosure for this sale can be found here. Corporate insiders own 0.23% of the company’s stock.

About U.S. Bancorp

(Free Report)

U.S. Bancorp, a financial services holding company, provides various financial services to individuals, businesses, institutional organizations, governmental entities, and other financial institutions in the United States. It operates through Wealth, Corporate, Commercial and Institutional Banking; Consumer and Business Banking; Payment Services; and Treasury and Corporate Support segments.

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Want to see what other hedge funds are holding USB? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for U.S. Bancorp (NYSE:USB – Free Report).

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ABMN Staff

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April 19, 2024
Bank of America, U.S. Bank fight back against 'Right to Gripe' suits

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U.S. Bank and Bank of America are both defending themselves against lawsuits alleging that their terms of service violated California’s so-called “Right to Gripe” law.
Bloomberg

Bank of America and U.S. Bank are fighting back against lawsuits alleging the two banks — in their terms of service — violated a California law that ensures customers have the right to air their grievances publicly.

The suits are part of a wave of recently filed cases that will likely help establish the scope of corporate liability under California’s so-called “Right to Gripe” law. The goal of the law is to protect consumers’ ability to complain online about their experiences with specific companies without the threat of retribution.

In recent months, plaintiffs’ lawyers have filed suits alleging that various companies — the list includes not only BofA and U.S. Bank, but also Amazon, Mastercard and United Parcel Service — violated the law.

The California law was signed by then-Gov. Jerry Brown in 2014 and took effect the following January. Nine years later, there is still not a lot of relevant case law, said Andrew Bluth, one of the plaintiffs’ lawyers who is spearheading the lawsuits. “I don’t think it’s been widely tested yet,” he said.

The suits against BofA and U.S. Bank were both filed in state court last November, but they have since been removed to federal court. The plaintiffs in both cases are seeking class-action status.

In the suit brought against Bank of America, the complaint cites language from the company’s Online Banking Service Agreement. That text relates to potential consequences in situations where customers expose the Charlotte, North Carolina-based bank to “liability, reputational harm or brand damage.”

Bluth, a partner at the law firm Singleton Schreiber, argued that the provision prevents BofA customers from making statements that in the bank’s determination may cause reputational harm. “That’s exactly what the law is designed to protect,” he said.

But earlier this month, Bank of America filed a motion to dismiss the suit, arguing that the bank’s terms of service do not prevent customers from making negative statements about BofA. The clause identified by the plaintiffs, the bank says, bars mobile-banking users from engaging in brand-damaging or illegal conduct, but it does not restrict speech.

BofA reserves the right to suspend or terminate users when they are determined to have violated the terms in question.

The relevant portion of the bank’s Online Banking Service Agreement relates to customers’ use of the Zelle money-transfer service, BofA said. The agreement states that “illegal or brand damaging activities” include but are not limited to: firearms; pornography; materials that promote intolerance, violence or hate; Ponzi schemes; digital currencies; terrorist funding; fraud; and money laundering.

“This list does not include any provision that says that Bank of America customers may not make ‘statements’ about Bank of America that are critical or disparaging, much less any provision addressing customers’ speech about Bank of America at all,” lawyers for the $3.2 trillion-asset bank wrote in a court filing.

“For example, the list does not include a provision that says that Bank of America customers may not post to X, or Facebook, or Yelp or any other social media platform with statements that are critical of the Bank.”

Separately, Bank of America also contends that its Online Banking Service Agreement is not a “contract” for the “sale or lease of goods or services,” which is what the California law covers.

U.S. Bank, the banking subsidiary of Minneapolis-based U.S. Bancorp, is making a similar argument.

“The language in question in U.S. Bank’s customer agreement addresses a customer’s conduct when using our products and services and is intended to prevent wrongful use of those products and services,” a bank spokesperson said in an email. “The agreement does not restrict what a customer can say about the bank. This suit has no merit.”

The outcome of the recently filed cases will likely have an impact on how frequently plaintiffs’ lawyers file suit under the nine-year-old California law.

California is not the only state that has a “Right to Gripe” law — sometimes known as a “Right to Yelp” law. But the Golden State’s statute may be the most attractive to litigants because it allows consumers to file civil lawsuits, and because a company’s first violation is subject to a fine of up to $2,500.

In a suit that draws class members from California’s 39 million residents, a successful lawsuit could open a company to considerable liability.

Clay Calvert is a professor emeritus at the University of Florida who wrote a 2018 law-review article titled “Gag Clauses and the Right to Gripe.” In an interview, he did not take a position on whether the terms of service used by Bank of America and U.S. Bank violate California’s law.

But he did argue that “Right to Gripe” laws are necessary in an era where many consumers use websites like Yelp and Tripadvisor to share their experiences, some of which are negative.

“People use these sites all the time,” said Calvert, who is also a nonresident senior fellow at the American Enterprise Institute. “And there certainly is a danger that business entities would try to squelch that speech.”

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Kevin Wack

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January 22, 2024
PNC, U.S. Bank closed roughly one in 10 branches in 2023

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The overall pace of bank branch closures slowed in 2023, but certain banks still slashed the size of their brick-and-mortar networks substantially.

U.S. banks closed 2,118 branch locations between January and the end of October, according to data from S&P Global Market Intelligence. That was a 19% decrease from the 2,614 branches shut down over the same period in 2022.

Roughly 22% of the closures were carried out by two super-regional banks — PNC Financial Services Group and U.S. Bancorp — both of which shuttered around 10% of their branches.

Across the industry, the total number of branches fell for the 14th straight year in 2023. There were 77,690 active bank branches nationwide at the end of October, according to S&P data, down from 79,000 branches at the end of 2022.

While larger banks top the list of financial institutions that have trimmed their physical presences in 2023, banks big and small are closing branches to reduce expenses and reinvest some of the resulting savings in their digital capabilities.

The appeal of saving on staff, facilities and other branch-related costs has driven merger and acquisition activity in recent years, especially at banks with plenty of branches. After longer-than-usual deal approval processes for many of those deals, some acquirers have finally managed in 2023 to execute planned branch closures.

Here is a closer look at the five banks that closed the largest shares of their branches this year, through October.

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Orla McCaffrey

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December 15, 2023

Dividend stocks are dirt cheap. It may be time to back up the truck.

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The stock market always overreacts, and this year it seems as if investors believe dividend stocks have become toxic. But a look at yields on quality dividend stocks relative to the market underlines what may be an excellent opportunity for long-term investors to pursue growth with an income stream that builds up over the years.

The current environment, in which you can get a yield of more than 5% yield on your cash at a bank or lock in a yield of 4.57% on a10-year U.S. Treasury note
BX:TMUBMUSD10Y
or close to 5% on a 20-year Treasury bond
BX:TMUBMUSD20Y
seems to have made some investors forget two things: A stock’s dividend payout can rise over the long term, and so can it is price.

It is never fun to see your portfolio underperform during a broad market swing. And people have a tendency to prefer jumping on a trend hoping to keep riding it, rather than taking advantage of opportunities brought about by price declines. We may be at such a moment for quality dividend stocks, based on their yields relative to that of the benchmark S&P 500
SPX.

Drew Justman of Madison Funds explained during an interview with MarketWatch how he and John Brown, who co-manage the Madison Dividend Income Fund, BHBFX MDMIX and the new Madison Dividend Value ETF
DIVL,
use relative dividend yields as part of their screening process for stocks. He said he has never seen such yields, when compared with that of the broad market, during 20 years of work as a securities analyst and portfolio manager.

Dividend stocks are down

Before diving in, we can illustrate the market’s current loathing of dividend stocks by comparing the performance of the Schwab U.S. Equity ETF
SCHD,
which tracks the Dow Jones U.S. Dividend 100 Index, with that of the SPDR S&P 500 ETF Trust
SPY.
Let’s look at a total return chart (with dividends reinvested) starting at the end of 2021, since the Federal Reserve started its cycle of interest rate increases in March 2022:

FactSet

The Dow Jones U.S. Dividend 100 Index is made up of “high-dividend-yielding stocks in the U.S. with a record of consistently paying dividends, selected for fundamental strength relative to their peers, based on financial ratios,” according to S&P Dow Jones Indices.

The end results for the two ETFs from the end of 2021 through Tuesday are similar. But you can see how the performance pattern has been different, with the dividend stocks holding up well during the stock market’s reaction to the Fed’s move last year, but trailing the market’s recovery as yields on CDs and bonds have become so much more attractive this year. Let’s break down the performance since the end of 2021, this time bringing in the Madison Dividend Income Fund’s Class Y and Class I shares:

Fund	2023 return	2022 return	Return since the end of 2021
SPDR S&P 500 ETF Trust	14.9%	-18.2%	-6.0%
Schwab U.S. Dividend Equity ETF	-3.8%	-3.2%	-6.9%
Madison Dividend Income Fund – Class Y	-4.7%	-5.4%	-9.9%
Madison Dividend Income Fund – Class I	-4.7%	-5.3%	-9.7%
Source: FactSet

Dividend stocks held up well during 2022, as the S&P 500 fell more than 18%. But they have been left behind during this year’s rally.

The Madison Dividend Income Fund was established in 1986. The Class Y shares have annual expenses of 0.91% of assets under management and are rated three stars (out of five) within Morningstar’s “Large Value” fund category. The Class I shares have only been available since 2020. They have a lower expense ratio of 0.81% and are distributed through investment advisers or through platforms such as Schwab, which charges a $50 fee to buy Class I shares.

The opportunity — high relative yields

The Madison Dividend Income Fund holds 40 stocks. Justman explained that when he and Brown select stocks for the fund their investible universe begins with the components of the Russell 1000 Index
RUT,
which is made up of the largest 1,000 companies by market capitalization listed on U.S. exchanges. Their first cut narrows the list to about 225 stocks with dividend yields of at least 1.1 times that of the index.

The Madison team calculates a stock’s relative dividend yield by dividing its yield by that of the S&P 500. Let’s do that for the Schwab U.S. Equity ETF
SCHD
(because it tracks the Dow Jones U.S. Dividend 100 Index) to illustrate the opportunity that Justman highlighted:

Index or ETF	Dividend yield	5-year Avg. yield	10-year Avg. yield	15-year Avg. yield	Relative yield	5-year Avg. relative yield	10-year Avg. relative yield	15-year Avg. relative yield
Schwab U.S. Dividend Equity ETF	3.99%	3.41%	3.20%	3.16%	2.6	2.1	1.8	1.6
S&P 500	1.55%	1.62%	1.79%	1.92%
Source: FactSet

The Schwab U.S. Equity ETF’s relative yield is 2.6 — that is, its dividend yield is 2.6 times that of the S&P 500, which is much higher than the long-term averages going back 15 years. If we went back 20 years, the average relative yield would be 1.7.

Examples of high-quality stocks with high relative dividend yields

After narrowing down the Russell 1000 to about 225 stocks with relative dividend yields of at least 1.1, Justman and Brown cut further to about 80 companies with a long history of raising dividends and with strong balance sheets, before moving further through a deeper analysis to arrive at a portfolio of about 40 stocks.

When asked about oil companies and others that pay fixed quarterly dividends plus variable dividends, he said, “We try to reach out to the company and get an estimate of special dividends and try to factor that in.” Two examples of companies held by the fund that pay variable dividends are ConocoPhillips
COP,
-0.29%
and EOG Resources Inc.
EOG,
+0.52%.

Since the balance-sheet requirement is subjective “almost all fund holdings are investment-grade rated,” Justman said. That refers to credit ratings by Standard & Poor’s, Moody’s Investors Service or Fitch Ratings. He went further, saying about 80% of the fund’s holdings were rated “A-minus or better.” BBB- is the lowest investment-grade rating from S&P. Fidelity breaks down the credit agencies’ ratings hierarchy.

Justman named nine stocks held by the fund as good examples of quality companies with high relative yields to the S&P 500:

Company	Ticker	Dividend yield	Relative yield	2023 return	2022 return	Return since the end of 2021
CME Group Inc. Class A	CME, +0.47%	2.04%	1.3	31%	-23%	1%
Home Depot, Inc.	HD, -0.39%	2.79%	1.8	-3%	-22%	-25%
Lowe’s Cos., Inc.	LOW, +0.27%	2.17%	1.4	3%	-21%	-19%
Morgan Stanley	MS, -1.54%	4.24%	2.7	-3%	-10%	-13%
U.S. Bancorp	USB, -0.25%	5.89%	3.8	-22%	-19%	-37%
Medtronic PLC	MDT, -4.32%	3.62%	2.3	1%	-23%	-22%
Texas Instruments Inc.	TXN, -0.21%	3.30%	2.1	-3%	-10%	-12%
United Parcel Service Inc. Class B	UPS, -0.16%	4.17%	2.7	-8%	-16%	-23%
Union Pacific Corp.	UNP, +1.52%	2.52%	1.6	2%	-16%	-15%
Source: FactSet

Click on the tickers for more about each company, fund or index.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

Now let’s see how these companies have grown their dividend payouts over the past five years. Leaving the companies in the same order, here are compound annual growth rates (CAGR) for dividends.

Before showing this next set of data, let’s work through one example among the nine stocks:

If you had purchased shares of Home Depot Inc.
HD,
-0.39%
five years ago, you would have paid $193.70 a share if you went in at the close on Oct. 10, 2018. At that time, the company’s quarterly dividend was $1.03 cents a share, for an annual dividend rate of $4.12, which made for a then-current yield of 2.13%.
If you had held your shares of Home Depot for five years through Tuesday, your quarterly dividend would have increased to $2.09 a share, for a current annual payout of $8.36. The company’s dividend has increased at a compound annual growth rate (CAGR) of 15.2% over the past five years. In comparison, the S&P 500’s weighted dividend rate has increased at a CAGR of 6.24% over the past five years, according to FactSet.
That annual payout rate of $8.36 would make for a current dividend yield of 2.79% for a new investor who went in at Tuesday’s closing price of $299.22. But if you had not reinvested, the dividend yield on your five-year-old shares (based on what you would have paid for them) would be 4.32%. And your share price would have risen 54%. And if you had reinvested your dividends, your total return for the five years would have been 75%, slightly ahead of the 74% return for the S&P 500 SPX during that period.

Home Depot hasn’t been the best dividend grower among the nine stocks named by Justman, but it is a good example of how an investor can build income over the long term, while also enjoying capital appreciation.

Here’s the dividend CAGR comparison for the nine stocks:

Company	Ticker	Five-year dividend CAGR	Dividend yield on shares purchased five years ago	Dividend yield five years ago	Current dividend yield	Five-year price change	Five-year total return
CME Group Inc. Class A	CME, +0.47%	9.46%	2.44%	1.55%	2.04%	20%	42%
Home Depot Inc.	HD, -0.39%	15.20%	4.32%	2.13%	2.79%	54%	75%
Lowe’s Cos, Inc.	LOW, +0.27%	18.04%	4.14%	1.81%	2.17%	91%	109%
Morgan Stanley	MS, -1.54%	23.16%	7.62%	2.69%	4.24%	80%	108%
U.S. Bancorp	USB, -0.25%	5.34%	3.60%	2.78%	5.89%	-39%	-26%
Medtronic PLC	MDT, -4.32%	6.65%	2.90%	2.10%	3.62%	-20%	-9%
Texas Instruments Inc.	TXN, -0.21%	11.04%	5.24%	3.10%	3.30%	59%	82%
United Parcel Service Inc. Class B	UPS, -0.16%	12.23%	5.56%	3.12%	4.17%	33%	56%
Union Pacific Corp.	UNP, +1.52%	10.20%	3.37%	2.07%	2.52%	34%	49%
Source: FactSet

This isn’t to say that Justman and Brown have held all of these stocks over the past five years. In fact, Lowe’s Cos.
LOW,
+0.27%
was added to the portfolio this year, as was United Parcel Service Inc.
UPS,
-0.16%.
But for most of these companies, dividends have compounded at relatively high rates.

When asked to name an example of a stock the fund had sold, Justman said he and Brown decided to part ways with Verizon Communications Inc.
VZ,
-0.94%
last year, “as we became concerned about its fundamental competitive position in its industry.”

Summing up the scene for dividend stocks, Justman said, “It seems this year the market is treating dividend stocks as fixed-income instruments. We think that is a short-term issue and that this is a great opportunity.”

Don’t miss: How to tell if it is worth avoiding taxes with a municipal-bond ETF

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October 11, 2023

U.S. Bank Increases Tech Spend 25% | Bank Automation News

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U.S. Bank focused on completing its integration of Union Bank in the second quarter, after acquiring the New York-based bank in December. The $590 billion U.S. Bank gained 1.2 million Union Bank customers since finishing its conversion in May, according to the bank’s Q2 earnings supplement. Half of these new users were digitally active within […]

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Victor Swezey

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July 19, 2023
Microsoft Stock Is a Buy, American Tower Can Climb, and More Analyst Reports

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These reports, excerpted and edited by Barron’s, were issued recently by investment and research firms. The reports are a sampling of analysts’ thinking; they should not be considered the views or recommendations of Barron’s. Some of the reports’ issuers have provided, or hope to provide, investment-banking or other services to the companies being analyzed.

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July 14, 2023
Fed stress tests see large banks able to handle recession and slide in commercial real estate prices

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The U.S. Federal Reserve said Wednesday that all 23 banks in this year’s stress tests withstood a hypothetical “severe” global recession and losses of up to $541 billion as well as a 40% decline in commercial real estate prices.

The banks in the 2023 stress tests hold about 20% of the office and downtown commercial real estate loans held by banks and should be able to handle office space weakness that has loomed amid slack demand for space in the wake of the COVID-19 pandemic.

“The projected decline in commercial real estate prices, combined with
the substantial increase in office vacancies, contributes to projected loss rates on office properties that are roughly triple the levels reached during the 2008 financial crisis,” the Fed said in a prepared statement.

Also read: FDIC studying plan to include smaller U.S. banks in Basel III capital requirements after failures in early 2023

Fed vice chair of supervision Michael S. Barr said the exams confirm that the U.S. banking system remains resilient, even in the wake of the failure of Silicon Valley Bank, Signature Bank and First Republic Bank earlier this year.

Barr also alluded to comments he made last week when he said the Fed should consider a wider range of risks that could derail banks in a process he described as reverse stress tests.

“We should remain humble about how risks can arise and continue our
work to ensure that banks are resilient to a range of economic scenarios, market shocks, and other stresses,” Barr said in a prepared statement.

The bank stress tests are closely watched because they help determine what capital banks have left over for stock buybacks and dividends. However, expectations are not particularly high at the current time for any huge payouts to investors given talk by regulators about high capital requirements tied to Basel III international banking laws, as well as a challenging economic environment with interest rates on the rise in an attempt to cool economic activity and tame inflation.

Senior Fed officials said banks will be clear to provide updates on their stock buybacks and dividends after the market close on Friday.

For the first time, the Fed conducted an “exploratory market shock” on the trading books of the U.S.’s eight largest banks including greater inflationary pressures and rising interest rates.

The results showed that the largest banks’ trading books were resilient to the rising rate environment tested. That group included Bank of America Corp., the Bank of New York Mellon, Citigroup Inc., the Goldman Sachs Group Inc., JPMorgan Chase & Co. , Morgan Stanley , State Street Corp, and Wells Fargo & Co.

Senior federal officials said they’re studying a wider application of the exploratory market shock to other banks.

In last year’s tests, the Fed did not place an emphasis on a rapid rise in interest rates partly because expectations were high for a recession with lower interest rates in 2023. Instead, interest rates rose. That market dynamic was a factor in the collapse of Silicon Valley Bank, which sold securities with lower interest rates at a loss to cover an increase in withdrawals, only to spark a run on the bank.

All told, the Fed said the 23 banks in the stress test managed to maintain their capital requirements even with a projected $541 billion in losses. (See breakdown below).

U.S. Federal Reserve chart

Under the most severe stress, the aggregate common equity risk-based capital ratio would decline by 2.3% to a minimum of 10.1%.

Other facets of the hypothetical recession included a “substantial” increase in office vacancies, a 38% reduction in house prices and a 6.4% increase in U.S. unemployment to a high of 10%. The drop in house prices in this year’s stress tests is worse than the decline in the Global Financial Crisis in 2008.

“The results looked pretty good,” said Maclyn Clouse, a professor of finance at the University of Denver’s Daniels College of Business. “The banks were in pretty good shape from a capital standpoint and they’d be able to withstand some shock. It’s good news.”

Barr’s remark on Fed officials being “humble” reflects the fact that regulators largely missed the Global Financial Crisis as well as the sudden demise of Silicon Valley Bank in March.

“They need to be humble,” Clouse said. “We need to be a little more humble about the results and a little more alert about new challenges that normally haven’t been looked at with stress tests.”

This year, the banks that took part in the stress tests including Bank of America Corp.
BAC,
-0.60%,
Bank of New York Mellon Corp.
BK,
-0.64%,
Capitol One Financial Corp.
COF,
+0.52%,
Charles Schwab Corp.
SCHW,
+1.01%,
Citigroup
C,
-0.37%,
Citizens Financial Group Inc.
CFG,
-1.61%
and Goldman Sachs Group Inc.
GS,
+0.07%.

Other exams took place at J.P. Morgan Chase & Co.
JPM,
-0.44%,
M&T Bank Corp.
MTB,
-0.18%,
Morgan Stanley
MS,
-0.52%,
Northern Trust Corp.
NTRS,
-0.46%,
PNC Financial Services Group Inc.
PNC,
-0.36%,
State Street Corp.
STT,
-0.62%,
Truist Financial Corp.
TFC,
-0.07%,
U.S. Bancorp
USB,
-0.71%
and Wells Fargo & Co.
WFC,
-0.71%.

In 2022, the Fed said banks could withstand 10% unemployment and a 55% drop in stock prices as part of the year-ago stress test.

KBW analyst David Konrad said in a June 22 research note he expected no “huge surprises” in addition to capital uncertainty around dividends and buybacks already expected by Wall Street.

Providing guidance on how the Fed will study bank strength, Fed chair of supervision Michael Barr said last week that the Fed needs to consider “reverse stress tests” to look at “different ways an institution can die” instead of simply submitting banks to a specific list of hypothetical hardships.

“We have to work harder at looking at patterns we haven’t seen before,” Barr said at an appearance on June 20.

Also Read: Fed official eyes ‘reverse stress tests’ for banks as results awaited after 2023 bank failures

Also read: FDIC studying plan to include smaller U.S. banks in Basel III capital requirements after failures in early 2023

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June 28, 2023
Moody’s Downgrades 11 Regional Banks, Including Zions, U.S. Bank, Western Alliance

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Moody’s Downgrades 11 Regional Banks, Including Zions, U.S. Bank, Western Alliance

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April 21, 2023
First Republic gets $30 billion in deposits from 11 major U.S. banks, but stock resumes slide as it suspends dividend

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Bank of America BAC, Citigroup C, JPMorgan Chase JPM and Wells Fargo WFC said Thursday that they are each making $5 billion in uninsured deposits into First Republic Bank FRC as part of a $30 billion backstop by 11 banks against the ravaged banking landscape of the past week.

However, First Republic stock fell 14.7% in after-hours trading after the bank said it would suspend its dividend to conserve cash. The bank last paid a quarterly dividend of 27 cents a share on Feb. 9 to shareholders of record as of Jan. 26.

It…

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March 16, 2023