What the Fed's Stress Tests Mean For Mutual Fund Investors (C, BAC, JPM, More)
Shauna O'Brien Mar 12, 2015
Inside the Results
Bank of America (BAC) – The bank’s capital plan was approved by the Fed, but the bank will not be able to boost its 5 cent dividend. The bank was told that it would have to resubmit its plans in the fall. BAC has been authorized to buy back up to $4 billion in shares.
Citigroup (C ) – The bank’s plan has been approved. It will finally be able to raise its 1 cent quarterly dividend to 5 cents per share. The bank was also given permission to buy back $7.8 billion in shares.
Goldman Sachs (GS) – Goldman had to make changes to its original plan, but the Fed approved its dividend hike from 60 cents to 65 cents quarterly.
JP Morgan (JPM) – The firm’s adjusted capital plan was approved by the Fed, and the bank was given permission to increase its dividend from 40 cents to 44 cents. The Fed will also allow JPM to buy back $6.4 billion in shares.
Wells Fargo (WFC) – The bank’s capital plan was approved by the Fed. WFC will be boosting its quarterly distribution by 7% and will also be buying back shares.
Morgan Stanley (MS) – Morgan Stanley’s capital plan was approved by the Fed. The bank has been given permission to buy back $3.1 billion in shares, and to raise its dividend from 10 cents to 15 cents.
More Buy Backs and Higher Dividends… For Most Big Banks
For investors bullish on banks, a mutual fund may be a good choice to gain exposure to the industry.
Mutual Funds to Watch
|Symbol||Mutual Fund||Top Five Holdings|
|FSRBX||Fidelity® Select Banking Portfolio||WFC, USB, BAC, JPM, C|
|FIDSX||Fidelity® Select Financial Services||BRK-B, JPM, C, BAC, USB|
|PRISX||T. Rowe Price Financial Services||C, JPM, BAC, STT, MS|
The Bottom Line
If you’ve enjoyed this article, sign up for the free MutualFunds.com newsletter; we’ll send you similar content weekly.
Sign up for Advisor Access
Receive email updates about best performers, news, CE accredited webcasts and more.