Morgan Stanley Plans To Return A Record $8.3 Billion To Shareholders In The Next 12 Months

by Trefis Team
Morgan Stanley
Rate   |   votes   |   Share

Morgan Stanley (NYSE:MS) has successfully cleared this year’s Fed stress test and has announced plans to return $8.3 billion to its shareholders over the next twelve months – making it the highest ever shareholder payout by the bank over a twelve-month period. Trefis has analyzed the trends in Morgan Stanley’s dividend payouts and share repurchases over the last 5 years and has summarized our expectations for the next three. You can modify our forecasts to see the impact of changes on Morgan Stanley’s share repurchase and dividends using our Interactive Dashboard, and can also see more Trefis data for financial services companies here.

Morgan Stanley’s 2019 Capital Return Plan

  • Under the latest capital return plan, Morgan Stanley will hike its quarterly dividends by 17% – from 30 cents now to 35 cents a share beginning Q3 2019. This works out to total dividends of $2.3 billion assuming average outstanding shares of 1.6 billion.
  • The bank will also repurchase $6 billion worth of its common shares over the next twelve months, which is a 28%-jump compared to the $4.7 billion in share repurchase Morgan Stanley announced in 2018.
  • The latest capital return plan of $8.3 billion would be the highest ever payout for the bank over a twelve month period.

The chart below details Morgan Stanley’s total shareholder payouts for each year since 2013, and includes our forecast for the next three years.

Historical Payouts

  • Before the 2008 recession, Morgan Stanley paid average dividends of $1.2 billion to its common stockholders over 2005-07 and also bought back on average shares worth $3.6 billion each year.
  • However, the economic downturn forced the bank to slash dividends to less than $450 million a year over 20-14. Another key factor that player a role in the bank’s depressed payout figure over 2012-14 was its decision to set aside cash to complete the acquisition of Smith Barney from Citigroup in a phased manner.
  • Quarterly dividends recovered in Q2 2015 from 10-cent to 15-cents per share, before further improving to 20 cents per share in Q3 2016.
  • Since then, quarterly dividends have gradually increased over the years to the current level of 30 cents per share and are expected to stand at 35 cents per share over Q3 2019 – Q2 2020.
  • Over the last ten years, Morgan Stanley has returned $31.2 billion in cash to common shareholders, an average of $3.1 billion a year – representing about 90% of its average retained earnings of $3.5 billion for this period.
  • Notably, the bank has paid $9.7 billion in dividend and $21.5 billion in share buybacks over the last decade.
  • It is evident from the above data that the bank has preferred share repurchase to dividends, as the main method to return cash to the shareholders.

What To Expect In 2019

  • We expect total dividends to be around $2.2 billion, as the annual dividend per share will increase to $1.35 from $1.21 in 2018. Also, the bank has repurchased $1.2 billion in shares in Q1 2019 and is expected to have repurchased shares worth an additional $1.2 billion in the second quarter (remaining share buyback out of $4.7 billion approved in the 2018 capital return plan).
  • Taken together with $3 billion in proposed purchases for the rest of the year (half of the total proposed repurchases of $6 billion), total share repurchases is expected to be around $5.4 billion in 2019.
  • The total payout for the year is, therefore, likely to be over $7.5 billion – which is 93% of our forecast for the bank’s net income of $8.1 billion, but slightly less than the actual payout for the year 2018.
  • This should also make 2019 the second-best year for Morgan Stanley investors in terms of shareholder payout.

We factor in these payouts in our analysis of Morgan Stanley in the form of an adjusted dividend payout rate (which is the total payout ratio), shown in the chart below.

Do not agree with our forecast? Create your own forecast for Morgan Stanley by changing the base inputs (blue dots) on our interactive dashboard.

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs
For CFOs and Finance TeamsProduct, R&D, and Marketing Teams
All Trefis Data
Like our charts? Explore example interactive dashboards and create your own

Rate   |   votes   |   Share


Name (Required)
Email (Required, but never displayed)
Be the first to comment!