JPMorgan Chase & Co. (NYSE: JPM) is rewarding its shareholders once again with a quarterly dividend of $1.25 per share, payable on Friday, Jan. 31. That is in line with the prior payout. The bank just posted record results, and the industry has been looking forward to the change of administration in Washington. The ongoing dividend payment underscores the JPMorgan management’s commitment to delivering consistent value to investors.

Why Investors Like Dividends

Investors favor dividend stocks for two main reasons. The first is that they offer enticing total return potential. Total return is a comprehensive measure of investment performance that includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or a portfolio consists of income and stock appreciation. It is one of the most effective ways to boost the prospects of overall investing success.

Dividend stocks can also provide investors with a steady, reliable stream of passive income. Passive income is money that is earned with little to no ongoing effort, usually from assets that generate cash flow. This income can come from a variety of sources, including stock dividends. Generating passive income is a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.

JPMorgan’s Dividend

JPMorgan has not cut its dividend since 2009, when the payout shrank from $0.38 a share to $0.05. The compound annual growth rate of the payout since then is 22.2%. The current dividend yield is about 1.9%, which is less than the industry and sector averages. It is also lower than those of the competitors listed below.

Note that JPMorgan’s share price has grown by more than 945% since 2009 as well, offering investors plenty of growth along with the income.

JPMorgan, the Company

This financial services company operates worldwide and is the result of the merger of several large U.S. banking companies. It is the largest bank in the United States and was the world’s largest bank by market capitalization in 2023.

The company offers deposit, investment, and lending products, cash management, and payments and services; mortgage origination and servicing activities; residential mortgages and home equity loans; and credit cards, auto loans, leases, and travel services to consumers and small businesses through bank branches, ATMs, and digital and telephone banking. It also provides investment banking products and services, as well as securities services, for asset managers, insurance companies, and public and private investment funds.

In addition, the company provides financial solutions to small and midsized companies, local governments, nonprofit clients, and large corporations, as well as investors, developers, and owners of multifamily, office, retail, industrial, and affordable housing properties. And the company offers retirement products and services, brokerage, custody, estate planning, lending, deposits, and investment management products to high net worth clients.

Its headquarters are in New York City, and the company was founded in 1799 by Aaron Burr. The current incarnation of the company went public in October of 1978. Now it competes with or is similar to, among others:

• Bank of America Corp. (NYSE: BAC)
• Citibank Inc. (NYSE: C)
• Morgan Stanley (NYSE: MS)
• Wells Fargo & Co. (NYSE: WFC)

JPMorgan crushed expectations in its recent quarterly report, including a record profit for 2024. Legendary CEO Jamie Dimon also recently suggested that he would step down in the next few years. Earlier in the year, the company agreed to pay $151 million to resolve five U.S. SEC enforcement cases, including allegations of misleading brokerage disclosures. Also, the company opened a new state-of-the-art office in Glasgow in the spring, and reportedly it is now looking at former Credit Suisse offices in London.

JPMorgan, the Stock

Shares of this Dow Jones industrial component are about 102% higher than five years ago, outperforming the S&P 500. The stock hit an all-time high of $270.68 after the earnings report, and it is up more than 11% year to date and over 54% higher than a year ago. The mean price target of $265.55 is less than the current share price. which suggests analysts see no upside in the next year, at least until targets are hiked. The consensus recommendation is to buy shares, including six Strong Buy recommendations. Barclays and UBS reiterated Buy-equivalent ratings recently, but Truist initiated coverage with a Hold rating.

The stock remains popular with hedge funds. Institutional investors hold almost 74% of the shares. BlackRock, State Street, and Vanguard have notable stakes. Note that more than 29 million shares, or about 1% of the float, are held short. Also, several executives have parted with shares this month.

Three Surprising Things Billionaires Look for in Dividend Stocks

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.