Tuesday, January 15, 2008

US Bancorp Raises Dividend 6.25%

Who would have thought a 6.25% dividend increase for a bank would be viewed as a positive action. Generally, I like to see double digit dividend growth on a year over year basis, but in this environment, 6.25% seems like a good outcome.

Although US Bancorp (USB) reported lower quarterly earnings of 53 cents per share versus the prior year's result of 62 cents per share, the bank seems to have a good handle on its mortgage related exposures. The bank did announce that 4th quarter results included a $107 million asset write down related to the purchase of some asset backed commercial paper held in money market funds managed by a USB subsidiary.

Analyst estimate 2008 earnings will come in around $2.74 per share versus 2.43 in 2007. The estimated payout ratio on 2008 earnings is approximately 62%. The 5-year average payout ratio is approximately 48%.

(click on table/chart for larger image)

US Bancorp dividend analysis January 15, 2008
US Bancorp stock chart January 15, 2008

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