Is JPM Stock Worth the Dividend?
JPMorgan Chase & Co. (NYSE:JPM) became the gold standard of banking during the financial crisis. The consensus was that JPM stock weathered the crash better than its rivals. That’s all well and good, but I’m more concerned with the dividend. Can it keep stacking cash all the way to my retirement? That’s what I really want to know.
JPMorgan has consistently paid out dividends since its inception in 1999. The yield size may have varied from time to time, but there is a clear historical level. From 2001 to early 2009, JPMorgan’s quarterly dividend stayed between $0.34 and $0.38 per share.
That’s right, not even the financial crisis put a dent in JPM stock’s dividend payouts. Are you starting to see why CEO Jamie Dimon is treated like a superhero on Wall Street?
JPMorgan did experience a slight drought in late 2009 and 2010 as legal disputes drained the firm’s cash flow. But after bottoming out at $0.05, the dividend eventually bounced back.
After a steady climb back from its 2010 lows, the dividend finally surpassed its old high of $0.38 per share. It now sits at $0.44, or three percent of the share price. I think that makes JPM stock a steal when you consider how cheaply it’s priced.
Dividend Hike in 2016?
Blue-chip stocks like JPMorgan are supposed to be relatively unchanging—they should be a rock on which you can build a retirement portfolio. So when we talk about whether or not JPMorgan has a safe dividend, we need to think about the next few decades.
Will the rise of new financial technology firms out of Silicon Valley threaten the dominance of big banks? Could payments services like Venmo or financing hubs like SoFi hurt the cash flow of behemoths like JPMorgan Chase?
The jury is still out on that one, but I seriously doubt it. Venmo, which is owned by Paypal Holdings Inc, logged $1.0 billion worth of payments in January 2016. That could look really impressive—except that QuickPay, dubbed the “Venmo” killer, clocked $2.0 billion in the same month. (Source: “Banks are teaming up to launch a Venmo killer,” Quartz, March 2, 2016.)
And who owns QuickPay? Well, JPMorgan Chase, of course. The company is keeping up with all the breakthroughs in fintech (financial technology), so I doubt they’ll be caught off guard.
All in all, JPMorgan’s dividend seems incredibly safe.