U.S. Bancorp’s Shareholder Payout Will Cross $5 Billion For The First Time Ever This Year

by Trefis Team
U.S. Bancorp
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U.S. Bancorp (NYSE:USB) will return $5.6 billion to its shareholders over the next twelve months as a part of its latest capital return – which includes a 13.5% hike in its quarterly dividend from 37 cents to 42 cents per share. Trefis has analyzed the trends in U.S. Bancorp’s dividend payouts and share repurchases over the last 5 years and has summarized expectations for the next three. You can modify our forecasts to see the impact any changes would have on U.S. Bancorp’s share repurchase and dividends using our Interactive Dashboard, and also see more Trefis data for financial services companies here.

U.S. Bancorp’s 2019 Capital Return Plan

  • Under the recently announced plan, U.S. Bancorp will hike its quarterly dividends by 13.5% – from 37 cents now to 42 cents a share beginning Q3 2019. This works out to total dividends of $2.6 billion assuming average outstanding shares of 1.6 billion.
  • The bank will also repurchase $3 billion worth of common shares over the next twelve months – which is the same as last year.
  • Taken together, this works out to a shareholder payout of $5.6 billion over the next twelve month.

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

Historical Payouts

  • Before the 2008 recession, U.S. Bancorp paid average dividends of $2.5 billion to its common stockholders over 2005-07.
  • However, the economic downturn forced the bank to slash dividends to less than $750 million a year over 2009 to 2012 – having to wait for three years before it could begin distributing any meaningful amount of cash to investors.
  • Quarterly dividends recovered in Q1 2012 from 13 cents to 20 cents per share and since then have gradually increased over the years to the current level of 37 cents per share.
  • The figure will increase to 42 cents per share over Q3 2019 – Q2 2020.
  • Over the last ten years, U.S. Bancorp has returned $31.7 billion in cash to common shareholders, an average of $3.2 billion a year – representing about 63% of its average retained earnings of $5 billion for this period.
  • Notably, the bank has paid $14.5 billion in dividend and $17.2 billion in share buybacks over the last decade.

What To Expect In 2019

  • We expect total dividends to be around $2.5 billion, as the annual dividend per share will increase to $1.59 from $1.28 in 2018.
  • Also, the bank has repurchased $648 million in shares in Q1 2019 and is expected to have repurchased shares worth an additional $782 million in the second quarter (remaining share buyback out of $3 billion approved in the 2018 capital return plan).
  • Taken together with $1.5 billion in proposed purchases for the rest of the year (half of the total proposed repurchases of $3 billion), total share repurchases is expected to be around $2.9 billion in 2019.
  • The total payout for the year is, therefore, likely to be over $5.4 billion – which is 81% of our forecast for the bank’s net income of $6.8 billion and 11% more than last year’s total payout.

We factor in these payouts in our analysis of U.S. Bancorp in the form of an adjusted dividend payout rate (which is the total payout ratio), shown in the chart below. You can understand how a change in the bank’s adjusted dividend payout affects its share value by making changes to the chart.

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

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