Monday, March 21, 2011

Citigroup Dividend: Earlier Than Expected?

Citigroup wasn't expected to start paying a dividend until next year. The Federal Reserve recently concluded a round of stress tests to suss out which banks are healthy enough to resume payouts to stockholders. Banks had to keep the results of those tests mum, but Citigroup — still recovering from a government bailout in 2008 — wasn't expected to be deemed dividend-worthy until 2012.

But think of Citigroup's announced quarterly dividend, of just a penny a share, as a pre-engagement ring, or a prelude to a more normal 2012.

"While the payout ratio on adjusted EPS is nominal, we would expect an increase in the dividend to a more normalized 20% payout ratio sometime in 2012," said analysts at Credit Suisse.


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