State Street Corp. intends to raise its quarterly dividend 10% to 92 cents a share after clearing the Federal Reserve's 2026 stress test. The increase, subject to board approval for the third quarter, extends a multiyear trend of dividend growth. The company also has $2.1 billion remaining under a $5 billion share repurchase authorization.
State Street Corp. intends to raise its quarterly dividend 10% to 92 cents a share after clearing the Federal Reserve's 2026 stress test.
The dividend increase, subject to board approval for the third quarter, follows the Fed's confirmation that State Street's Stress Capital Buffer will remain at the 2.5% floor through Sept. 30, 2027, the company said.
The hike from 84 cents per share extends State Street's record of annual dividend increases. The company raised its payout 11% after last year's stress test and had previously increased annual dividends four consecutive times by 10%. State Street's five-year annualized dividend growth stands at 9.43%, with a payout ratio of 30% of earnings, leaving room for reinvestment.
The move reflects management's confidence in the bank's capital position. State Street held $130.1 billion in cash and deposits as of March 31, against $25.2 billion in long-term debt. The company also has $2.1 billion remaining under a $5 billion share repurchase authorization from January 2024 with no expiration date.
State Street's common equity tier 1 ratio requirement remains unchanged at 8%, reflecting the Fed's assessment that the bank can withstand a severe downturn. The 2026 stress test projected more than $700 billion in aggregate losses across 32 major institutions, all of which maintained capital above regulatory minimums.
The dividend announcement aligns with similar moves across the banking sector. JPMorgan Chase & Co. intends to raise its quarterly dividend 10% to $1.65 a share and authorized a $50 billion buyback program. Morgan Stanley plans to increase its dividend to $1.15 a share from $1 and reauthorized a $20 billion repurchase program.
State Street shares have gained 27.7% over the past six months, outperforming the industry's 13.3% advance. The stock carries a Zacks Rank #2 (Buy).
The dividend increase, if approved, would take effect in the third quarter of 2026. Investors will watch State Street's second-quarter earnings report for updated capital return plans and forward guidance on net interest income.
This article is for informational purposes only and does not constitute investment advice.
