It's A Great Day For Bank Investors!
The second part of the CCAR (Comprehense Capital Analysis and Review) results were released this afternoon. Since the "Great Financial Crisis", large banks are required to report to the Federal Reserve with their capital on hand in order for it to be "stress tested" to determine how they would fare under certain hypothetical conditions. In theory this is a good idea; however, I doubt that all scenarios are covered in the tests because every downturn/crisis is different from the last. As Mark Twain is purported to have said, "History doesn't repeat, but it often rhymes".
Part of the CCAR testing is also whether the Federal Reserve greenlights the capital return plans, i.e. dividends and share repurchases, that the banks intend to proceed with.
Well, this afternoon the capital return plans were released and man it was great to see. After many companies had announced slowing dividend growth earlier this year, at least partially due to pulling some growth forward thanks to the Tax Cut and Jobs Act last year, it was great to see some huge raises coming from the financials.
Across my taxable account and my Roth IRA I own 4 of the 18 banks that are subject to CCAR. So this afternoon definitely felt like I was there for one of Oprah's giveaways as the dividend raises just kept flying in. Just looking at all of those raises that were announced in the span of 10 or so minutes and you can tell why I was a happy dividend growth investor.
If you own any of the 18 banks subject to CCAR review be sure to go and check what kind of dividend raises you got!
Do you own any of the big banks? Were you happy with the latest forthcoming raises?