Fifth Third Confirms Dividend Hike and Doubles Its Share Buybacks

Fifth Third Bancorp (NASDAQ: FITB) is confirming last week’s news that the bank stress tests and the Federal Reserve’s Comprehensive Capital Analysis & Review is allowing for a higher bank dividend.

The regional banking company with some $122 billion in assets lifted its dividend by 10% to $0.11 per common share per quarter and is payable on April 18, 2013 to shareholders of record as of the close of March 29, 2013.

Fifth Third’s 2013 plan submitted to the Federal Reserve included the potential increase its quarterly dividend to $0.12 per share in the second quarter of 2013 through the first quarter of 2014. The bank is reconfirming that it will consider raising its dividend again at the scheduled quarterly meeting in June.

Be advised that the $0.10 payout had only been in place for two quarters and had been at $0.08 for a full year before that.

What may be just as important, or even more important under the current climate, is that Fifth Third also approved a new share buyback plan for up to 100 million shares. Today’s new buyback plan replaces Fifth Third’s 2012 buyback plan which had about 54 million shares remaining authorized for repurchase, making this close to a doubling of the authorized share buyback limit. The bank said that its plan submitted included share repurchases of up to $984 million (see below) through the first quarter of 2014 plus any incremental repurchases related to any after-tax gains from the sale of Vantiv, Inc. stock.

This 100 million shares would come to a total of almost $1.65 billion if all done at prevailing market prices. With 10.5 million shares traded on an average day, this is close to ten trading days worth of volume as well.

Fifth Third common holders who are just now buying will have a new dividend yield of 2.67%. Shares are flat on the day at $16.48 against a 52-week range of $12.04 to $16.77.

Fifth Third did not quite make our list of the Safest Banks in America for 2013 but it will be more closely reviewed for adjusted criteria later in 2013 or in early 2014.