Banks May Offer Dividend Growth Again in 2021
Monday, April 19, 2021
Out of the 22 large US banks, only Wells Fargo and Capital One (neither is owned by Miller/Howard) cut dividends during 2020. Banks proved to be a reliable source of dividends, even during a difficult period.
What’s more, bank balance sheets continue to be strong, even in the additional December 2020 stress test using COVID-19 recession scenarios. As a group, despite doubling the reserves set aside for potential (but not realized) loan losses, banks actually improved their capital metrics during 2020, as earnings were substantially more than dividends paid. The money is literally “in the bank,” meaning that excess capital has accumulated.
Importantly for us, the Fed recently announced that it will once again allow banks to increase their dividends, provided they pass the June 2021 stress test.
Until then, buybacks in the first half of 2021 reduce shares outstanding, making dividend increases more affordable.
Read the 1Q 2021 Quarterly Report ►
Gregory Powell, PhD, oversees the Portfolio Management Team. Greg is the designated lead or co-lead Portfolio Manager on the firm’s core strategies. In addition, he holds a position on Miller/Howard’s Executive Committee. Greg joined Miller/Howard in 2017 and served as a portfolio manager and Deputy Chief Investment Officer. He was promoted to CIO in 2020, after the retirement of founder Lowell Miller. Prior to joining MHI, Greg had a distinguished 19-year career as a portfolio manager and director of research at AllianceBernstein. At AB, he managed a team of 12 analysts and a suite of products with $11 billion in AUM. He also served as head of fundamental value research there, redesigning the analyst role with an emphasis on investment success and training analysts in all aspects of the position. He holds a BA in Economics/Mathematics from the University of California Santa Barbara, and a PhD and MA in Economics from Northwestern University.