360° Coverage : State Street Rewards Investors With $2.2 Billion Capital Plan

2 Updates

State Street Rewards Investors With $2.2 Billion Capital Plan

Apr 3 2014, 12:56pm CDT | by

State Street recently announced plans to buy back shares worth $1.7 billion between now and the end of March 2015, while also hiking common share dividends by 15%. Last year, the bank initiated the...

Filed under: news

 
 
 

29 weeks ago

State Street Rewards Investors With $2.2 Billion Capital Plan

Apr 3 2014, 12:56pm CDT | by

State Street recently announced plans to buy back shares worth $1.7 billion between now and the end of March 2015, while also hiking common share dividends by 15%. Last year, the bank initiated the biggest share buyback in its history after getting the Federal Reserve’s approval on its plans to eliminate $2.1 billion worth of its shares from the equity market. The Fed did not have any problems clearing State Street’s capital plans this time either, given that the bank aced this year’s stress tests with the highest core Tier 1 common capital ratio figures among the 30 banks tested (see Fed Stress Test For Banks: Rationale, Results & Implications).

We maintain our price estimate for State Street’s stock at $78, which is about 10% ahead of current market prices.

See our full analysis for State Street here

A quick glance through State Street’s dividend payment history shows that the bank raised its dividend at least once a year between 1995 and 2001, with the frequency doubling over the period from 2001 to 2008. But as is evident from the table below, State Street does not have a great record of returning too much cash to investors. The bank handed out less than $400 million in dividends at its peak dividend rate in 2008. The numbers nearby have been taken from the bank’s annual reports (see below).

State Street’s focus on returning money to investors in recent years is demonstrated by the fact that the custody bank has repurchased almost $3.5 billion worth of shares over 2012-2013. As a direct result, the average number of its outstanding shares has fallen more than 10% from about 500 million in 2011 to under 450 million in 2013.

(in $ mil) 2007 2008 2009 2010 2011 2012 2013
Common Stock Dividends 301 399 168 20 295 463 486
Shares Repurchased 1,002 - - - 675 1,440 2,040
Total 1,303 399 168 20 970 1,903 2,526

Assuming State Street’s board approves the dividend hike starting Q2 2014, the bank will pay shareholders $0.30 per share for three quarters this year – implying dividends of $1.16 per share for the year 2014. This points to a little less than $500 million in common stock dividends for the year, if the number of shares stays constant at 430 million (though it will likely decline). That combined with the proposed $1.7 billion share buyback plan means that the bank will return $2.2 billion cash to its investors this year. While this is 12% lower than the $2.5 billion figure for 2013, it is still the second highest payout by State Street in its history.

We represent these payouts in our analysis of State Street in the form of an adjusted dividend payout rate shown in the chart below. As this payout rate was not meaningful in 2009, we represent it in the chart as 0%.

See More at Trefis | View Interactive Institutional Research (Powered by Trefis)

Like our charts? Embed them in your own posts using the Trefis WordPress Plugin.

 
Update
2

8 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workfo ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

8 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH370 and MH17 ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

World Bank approves $75 mn for pastoralists in Horn of Africa
Nairobi, Oct 26 (IANS) The World Bank has approved an additional credit of $75 million to improve the livelihoods and resilience of pastoralists in the Horn of Africa.
 
 
Slovakia to provide further financial help in fighting Ebola
Bratislava, Oct 26 (IANS) Slovakia planned to provide some 90,000 euros ($114,000) to countries affected by Ebola to help with the construction of field hospitals, foreign ministry said Saturday.
 
 
Mauritania closes border with Mali after Ebola death
Nouakchott, Oct 26 (IANS) Mauritania has closed its border with Mali after an Ebola death was confirmed in the border area this week, a health official said Saturday.
 
 
Number of Ebola cases crosses 10,000: WHO
Geneva, Oct 25 (IANS/EFE) The World Health Organisation (WHO) confirmed Saturday that the number of Ebola cases has risen to more than 10,000 in the eight affected countries, two of which, Nigeria and Senegal, had recently been declared free of the virus.
 
 
 

Latest from the Network

Second MERS case reported in Qatar
Doha, Oct 23 (IANS) A 43-year-old man in Qatar has tested positive for Middle East Respiratory Syndrome (MERS) in the second confirmed case of the deadly virus in 10 days, media reported Thursday. The patient had...
Read more on Business Balla
 
Two people die in Pakistan bomb blast
Islamabad, Oct 23 (IANS) At least two people were killed and 12 others injured in an explosion that took place in Pakistan's Balochistan province Thursday, media reported. The bomb was planted on a motorcycle, Dawn...
Read more on Politics Balla
 
Trott extends contract with Warwickshire till 2017
London, Oct 23 (IANS) England batsman Jonathan Trott, whose mental issues led to his abrupt departure from last winter's Ashes tour, has confirmed his successful comeback to competitive cricket by signing a new three-...
Read more on Sport Balla
 
Srikanth, Kashyap big movers in BWF rankings
Kuala Lumpur, Oct 23 (IANS) Indian men shuttlers Kidambi Srikanth and Parupalli Kashyap jumped seven places each in the latest Badminton World Federation (BWF) rankings released Thursday while Olympic bronze medallist...
Read more on Sport Balla
 
Alvin Stardust dead
London, Oct 23 (IANS) English singer Alvin Stardust died after a short illness. He was 72. Stardust's manager confirmed the news about his demise Thursday, reports mirror.co.uk. He was recently diagnosed with...
Read more on Celebrity Balla
 
Indian man reunited with family after 40 years
Dubai, Oct 23 (IANS) An Indian man, who had disappeared from his hometown in Kerala nearly 40 years ago, has been found by his family at a hospital in Dubai in the UAE, a newspaper report said. Now in his 60s, Abdulla...
Read more on Politics Balla
 
Srikanth, Kashyap, Saina rise in world rankings
Kala Lumpur, Oct 23 (IANS) Indian men shuttlers Kidambi Srikanth and Parupalli Kashyap jumped seven places each in the latest released Badminton World Federation (BWF) rankings Thursday while Olympic bronze medallist...
Read more on Sport Balla
 
Flintoff signs for Big Bash side Brisbane Heat
Brisbane, Oct 23 (IANS) Former England captain and all-rounder Andrew Flintoff, who retired from international cricket in 2009, Wednesday confirmed that he will play for Brisbane Heat in the Big Bash League (BBL) this...
Read more on Sport Balla
 
OPEC daily basket price falls again
Vienna, Oct 23 (IANS/WAM) The basket of 12 crude oils of the Organization of Petroleum Exporting Countries (OPEC) closed at $81.94 a barrel Wednesday compared to $82.09 Tuesday, the OPEC Secretariat said. The new OPEC...
Read more on Business Balla
 
Lopez to sign multi-million dollar deal?
Los Angeles, Oct 23 (IANS) Singer-actress Jennifer Lopez is reportedly in the final stages of securing a multi-million dollar deal to perform in Las Vegas. The 45-year-old is being offered $350,000 per show at The...
Read more on Celebrity Balla