360° Coverage : Morgan Stanley Hikes Dividends After Five Years; Will Return $1....

2 Updates

Morgan Stanley Hikes Dividends After Five Years; Will Return $1.8 Billion To Investors

Apr 4 2014, 12:52pm CDT | by

Morgan Stanley’s investors have waited five years for the investment bank to recover from losses in the aftermath of the economic downturn, and then to complete reshaping its business model...

Filed under: news

 
 
 

21 weeks ago

Morgan Stanley Hikes Dividends After Five Years; Will Return $1.8 Billion To Investors

Apr 4 2014, 12:52pm CDT | by

Morgan Stanley’s investors have waited five years for the investment bank to recover from losses in the aftermath of the economic downturn, and then to complete reshaping its business model around its wealth management operations before it can finally begin returning significant capital to them. The wait is finally over, with the bank receiving the Federal Reserve’s approval to double its quarterly dividends for the first time since Q1 2009 – when it set them at their current 5-cents-a-share level – and also to repurchase shares worth up to $1 billion by the end of March 2015. Given the bank’s roughly 2 billion outstanding shares, this capital plan entails a payout of about $1.8 billion over the next four quarters.

Although this figure is well below the roughly $5 billion in dividends and share repurchases for Morgan Stanley each year over the 2005-2007 period, it is three times the amount it has handed out annually between 2009 and 2011 and is an important first step by the bank to improve its payout ratios over coming years.

See our full analysis for Morgan Stanley here

We maintain a $35 price estimate for Morgan Stanley’s stock, as the bank’s capital plan for 2014 is largely in-line with our estimates.

Historically, Morgan Stanley focused considerably on returning cash to investors – something that was a common trend among investment banks prior to the economic downturn. Like its competitors, Morgan Stanley preferred to do so not by paying out a high dividend each quarter, but by buying back shares worth billions of dollars each year. This is evident from the fact that the bank’s increase in quarterly dividends between Q1 2000 to Q1 2009 was not sizable, but by the end of this period the bank was routinely spending three times the amount it handed out as dividends to repurchase shares.

The table below puts things in perspective, as it summarizes Morgan Stanley’s capital return figures for each year since 2005. The data has been compiled using figures reported in annual reports:

(in $ mil) 2005 2006 2007 2008 2009 2010 2011 2012 2013
Common Stock Dividends 1,180 1,148 1,151 822 623 275 542 373 379
Shares Repurchased 3,693 3,376 3,753 1,831 50 317 317 227 691
Total 4,873 4,524 4,904 2,653 673 592 859 600 1.070

The disparity in Morgan Stanley’s payout to common shareholders before and after the economic downturn stand out clearly here. But a poor operating performance over the period was not the only factor to blame for this. The bigger reason was that Morgan Stanley was directing its cash to acquiring 100% of the Smith Barney brokerage business form Citigroup. In fact, once the bank completed the acquisition early last year, its plan to buy back $500 million worth of shares was approved by the Federal Reserve within a couple of months.

But the real boost to investor payouts is no doubt seen in this year’s capital plan. Based on our estimates that the bank will report a net income of $3.8 billion this year, the proposed plan represents a payout ratio between 45-50% for this year. We represent dividend payouts in our analysis of Morgan Stanley in the form of an adjusted dividend payout rate, as shown in the chart below. As this payout rate was not meaningful in 2008, 2009 and 2012 we represent the figure for these years in the chart as 0%.

Submit a Post at Trefis Powered by Data and Interactive Charts | Understand What Drives a Stock at Trefis

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

 
Update
2

3 days 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 workforce of 20,000 by 30 per ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

4 days 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" hits ...
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

Nigeria to get Japanese drug for Ebola treatment
Abuja, Sep 2 (IANS) Nigeria will soon get a Japanese drug to treat Ebola, the country's Health Minister Onyebuchi Chukwu said Monday.
 
 
Japan to aid connectivity upgrade in northeast India
Tokyo, Sep 1 (IANS) India and Japan Monday decided to strengthen cooperation for improving connectivity and socio-economic development in northeastern states of India.
 
 
Three Ebola cases recorded in Nigeria oil hub
Abuja, Sep 1 (IANS) At least three cases of Ebola virus disease (EVD) have been recorded in Nigeria's oil hub of Port Harcourt, where a fatality was confirmed last week, the country's Minister of Health Onyebuchi Chukwu said here Monday.
 
 
India, Japan to elevate strategic partnership
Tokyo, Sep 1 (IANS) Prime Minister Narendra Modi Monday said relations with Japan were of the "highest priority" for his government and announced a slew of initiatives, including turning the strategic partnership into a "special" partnership and a fast-track channel for Japanese investors.
 
 
 

Latest from the Network

Kelly Brook suffered second miscarriage
London, Sep 2 (IANS) Actress-model Kelly Brook has revealed that she suffered a second miscarriage while dating Thom Evans. The 34-year-old and the former rugby star lost their first child May 6, 2011 when Brook gave...
Read more on Celebrity Balla
 
Russia may retaliate against fresh EU sanctions
Moscow, Sep 2 (IANS/EFE) Russia will take retaliatory measures to defend its legitimate interests if the European Union imposes new sanctions over Moscow's intervention in Ukraine, the country's foreign ministry said...
Read more on Politics Balla
 
Britney Spears looking forward to dating
Britney Spears is looking forward dating again. The 32-year-old singer admitted during her 'Piece of Me' show at the Planet Hollywood in Las Vegas yesterday (08.31.14) that she's excited about meeting someone new...
Read more on Celebrity Balla
 
Lindsay Lohan seeks hypnosis to quit smoking
Lindsay Lohan has reportedly been undergoing hypnotherapy to help her give up smoking. The 28-year-old actress has turned to psychotherapy in the hope of kicking her nicotine addiction before she performs in 'Speed-the...
Read more on Celebrity Balla
 
Ian Somerhalder and Nikki Reed spend $860 in sex shop
Ian Somerhalder and Nikki Reed allegedly spent nearly $1,000 in a sex shop yesterday (08.31.14). The new couple, who have been dating for the past few months, reportedly forked out $860 on a number of erotic toys -...
Read more on Celebrity Balla
 
Robin Williams' daughter returns to Twitter
Robin Williams' daughter has returned to Twitter. Zelda Williams posted her first tweet on the social networking site tonight (01.09.14) almost three weeks after she abandoned her account when she received abusive...
Read more on Celebrity Balla
 
Is Miley Cyrus dating Douglas Booth?
Los Angeles, Sep 2 (IANS) Pop star Miley Cyrus and British actor Douglas Booth are reportedly dating. The "Wrecking Ball" hitmaker was first rumoured to be romancing Booth in 2010 when they co-starred in teen drama "...
Read more on Celebrity Balla
 
UN chief alarmed by Israeli claim on West Bank land
United Nations, Sep 2 (IANS) UN Secretary-General Ban Ki-moon Monday expressed alarm at the Israeli declaration of a 400 hectares area in the West bank as "state land". "The secretary-general is alarmed by yesterday's...
Read more on Politics Balla
 
Three executed in Yemen for having US links
Aden, Sep 2 (IANS) Three people have been executed by militants in Yemen Monday for having links with the United States, a military source said. "Suspected Yemen-based Al Qaida operatives kidnapped three local...
Read more on Politics Balla
 
Lena Dunham condemns naked photo leak
Los Angeles, Sep 2 (IANS) Actress-writer Lena Dunham has condemned a mystery hacker who leaked nude photographs of celebrities, including actress Jennifer Lawrence. Lawrence hit headlines Sunday when intimate snaps of...
Read more on Celebrity Balla