Is JPMorgan's Recent Dividend Hike Enough to Buy the Stock?

JPMorgan JPM announced a quarterly dividend of $1.50 per share, which marks a 7.1% hike from the prior payout. It will be paid out on Oct. 31, 2025, to shareholders of record as of Oct. 6. The increase is in line with the bank’s previous announcement to raise its dividend after the clearance of the 2025 stress test.

Like JPM, its close peers, Bank of America BAC and Citigroup C, raised their quarterly dividends as they cleared this year’s stress test. In July, Bank of America announced a 7.7% increase in its dividend to 28 cents per share, while Citigroup raised it 7.1% to 60 cents per share.

This is the second dividend hike announced by JPMorgan this year. In March, the company announced a 12% increase in its quarterly dividends. Raising quarterly dividends reflects the company’s effort to reward shareholders after delivering record profits despite turmoil in the banking sector and a challenging macroeconomic backdrop.

Based on yesterday’s closing price of $309.19, the company’s dividend yield currently stands at 1.81%.

JPMorgan has a share repurchase plan in place. In June, the company authorized a share repurchase program of $50 billion, effective July 1, 2025. 

JPMorgan has a solid balance sheet position. As of June 30, 2025, the company had a total debt worth $485.1 billion (the majority of this is long-term in nature). Its cash and due from banks and deposits with banks were $420.3 billion on the same date. It also maintains long-term issuer A/AA-/A1 ratings from Standard and Poor’s, Fitch Ratings and Moody’s Investors Service, respectively.

Given a strong balance sheet position and earnings strength, the company is expected to sustain current capital distributions. This will enhance shareholder value.

Other Factors to Consider Before Buying JPMorgan Stock

Interest Rate Cuts & Net Interest Income: At the Barclays Global Financial Services Conference last week, Douglas Petno, co-CEO of Commercial & Investment Banking (CIB), reiterated this year’s net interest income (NII) guidance while warning that lower rates will likely hurt the metric next year.

For 2025, management expects NII of $95.5 billion, up more than 3% year over year. This is likely to be driven by robust loan demand and deposit growth. Nonetheless, as the Fed begins cutting rates this year, JPMorgan’s NII is expected to face some headwind on an exit rate going into next year as its balance sheet is highly asset-sensitive.

Similarly, Bank of America and Citigroup are expected to witness a modest NII compression over the medium term as the central bank cuts interest rates. Both banks expect continued NII expansion in 2025, driven by strong loan demand and deposit growth.

Expansion Initiatives: JPMorgan is expanding its branch network in new regions despite the rise of mobile and online banking. The bank plans to open more than 500 branches by 2027, with 150 already built in 2024. This initiative aligns with the company’s broader effort to tailor its branch network to meet client needs and relationships and boost cross-selling across mortgages, loans, investments and credit cards.

Additionally, JPMorgan has expanded through strategic acquisitions, including a larger stake in Brazil’s C6 Bank, partnerships with Cleareye.ai and Aumni, and the 2023 purchase of First Republic Bank. Further, the company launched its digital retail bank, Chase, in the U.K. in 2021 and plans to expand the reach of its digital bank in Germany by early 2026 and eventually across the European Union. JPMorgan is also focused on bolstering its presence in China, Africa and many Middle Eastern countries.

Rebound in Investment Banking (IB) Business: Global deal-making came to a grinding halt at the beginning of 2022 due to the Russia-Ukraine conflict, fears of economic slowdown and high inflation numbers, something JPMorgan was not immune to. Yet, it continued to rank #1 for global IB fees. In 2024, the company’s total IB fees (in the CIB segment) rose 36% year over year.

This year has had its share of hiccups. It began on an optimistic note, although the market sentiment cooled after Trump’s tariff policies were launched on the 'Liberation Day'. Deal-making activity has picked up since then, with the uptrend in IB fees expected to continue. The healthy IB pipeline, an active M&A market and the company’s leadership position ensure even stronger growth once the macro situation changes.

At the conference, Petno stated the third quarter of 2025 is expected to be a “solid” one for JPMorgan’s IB business, with corresponding fees projected to jump year over year in the low-double-digit range.

Weak Asset Quality: JPMorgan’s asset quality has been deteriorating. While the company recorded negative provisions in 2021, a substantial rise in provisions was recorded in the years after that because of the worsening macroeconomic outlook.

Nevertheless, lower rates will likely support JPM’s asset quality, as declining rates will ease debt-service burdens and improve borrower solvency. Fed rate cuts will help stabilize or even modestly improve the overall credit performance this year, especially in consumer and corporate loan books, as long as the U.S. economy remains resilient. Management projects the card net charge-off rate to be 3.6% for 2025.

Is JPMorgan Stock a Buy Now?

This year, JPM shares have gained 29%, outperforming the industry’s rally of 27%.

On the back of solid price performance, the JPM stock is trading at a premium. Its forward 12-month earnings multiple of 15.39X compared with the industry’s 14.95X indicates a stretched valuation.

Given JPMorgan’s strong fundamentals and an encouraging third-quarter outlook, the stock presents a compelling case for long-term gains. However, investors should remain mindful of its premium valuation, cautious net interest income (NII) guidance for next year and the Fed’s monetary policy trajectory.

Prospective investors should carefully assess how these factors may influence JPMorgan’s financial performance before initiating a position. For those already holding the stock, retaining it appears prudent, as its robust fundamentals make long-term underperformance less likely.

Currently, JPM carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research