JPM Announces Dividend Hike & Share Buyback Plan: Sustainable or Not?

After last week’s clearance of the annual stress test, JPMorgan JPM, the largest U.S bank, announced a plan to increase its quarterly dividend and authorized a new share repurchase program. 

Subject to approval by the board of directors, JPM intends to declare a quarterly dividend of $1.50 per share in the third quarter of 2025, representing a rise of 7% from the prior payout. Before this, the company had hiked its dividend by 12% in March 2025 and by 9% in September 2024. Over the past five years, the company has increased dividends five times, at an annualized growth rate of 6.8%. 

JPMorgan’s Historical Dividend Trend
 

Moreover, JPMorgan authorized a new share repurchase plan of $50 billion, effective immediately. This program replaces the 2024 share buyback authorization of $30 billion, which had approximately $11.7 billion remaining as of March 31, 2025.

JPMorgan cleared this year’s stress test impressively. The company’s projected common equity tier 1 (CET1) ratio was a solid 14.2%, well-above the minimum requirement of 4.5%. This indicates that the bank can withstand a severe recession with plenty of capital on hand to absorb hundreds of billions of dollars in losses.

JPM’s fortress balance sheet, with ample capital and liquidity, helps it stay profitable and deliver value to shareholders. As of March 31, 2025, the company had total debt of $471.9 billion, and cash and due from banks and deposits with banks were $425.9 billion on the same date. Hence, given a strong capital position and earnings strength, the company should be able to sustain enhanced capital distributions.

Where Do JPM’s Peers Stand in Terms of Capital Distributions?

Apart from JPMorgan, several other banks, including Bank of America BAC and Goldman GS, announced their new/enhanced capital plans after clearing the 2025 stress test. 

Bank of America plans to raise its quarterly dividend by 8% to 28 cents per share, beginning in the third quarter of 2025. Like JPM, the company cleared this year’s stress test with its projected CET1 capital ratio of 10.2%. Over the past five years, the bank has announced an increase in dividends four times.

Goldman intends to hike its quarterly dividend 33% to $4 per share, subject to approval by the board of directors. Similar to JPMorgan and BAC, Goldman’s projected CET1 capital ratio was a solid 12.3% as it cleared the 2025 stress test. The company raised its dividend four times over the past five years.

JPMorgan’s Price Performance, Valuation and Estimates

JPMorgan shares have soared 21.2% this year, outperforming the S&P 500 Index gain of 4.8%. 

YTD Price Performance
 

From a valuation standpoint, JPM trades at a 12-month trailing price-to-tangible book (P/TB) of 3.07X, above the industry average.

P/TB

Moreover, the Zacks Consensus Estimate for JPMorgan’s 2025 earnings implies a decline of 6% on a year-over-year basis, while 2026 earnings are expected to grow at a rate of 5.3%. In the past week, earnings estimates for 2025 have moved marginally upward, while for 2026, it has remained unchanged.

Earnings Estimates
 

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

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

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