JPMorgan buys back $50 billion and lifts its dividend after Fed stress tests

JPMorgan Chase on Wednesday unveiled a new $50 billion stock buyback plan and raised its quarterly dividend after the Federal Reserve's stress test showed the industry still had strong capital levels.

The largest U.S. bank by assets said it would raise its quarterly dividend by 10% to $1.65 a share, subject to board approval, and authorized a buyback plan effective July 1.

JPMorgan CEO Jamie Dimon said in a statement: “The board's proposed dividend increase reflects our continued investment in the business and our strong financial performance. As always, we are prepared for all scenarios, including the hypothetical 2026 regulatory 'severely adverse' scenario.”

Goldman Sachs also raised its quarterly payout, saying its dividend would rise 11% to $5 a share because of strong earnings and capital.

Wells Fargo said it expected to raise its dividend 11% to 50 cents a share; Morgan Stanley increased its payout 15% to $1.15 a share and reauthorized a $20 billion multi-year common stock repurchase program.

Bank of America CEO Brian Moynihan said the bank will announce its dividend plans next month.

Those moves came after the Fed released its annual stress test results. The test showed that 32 large banks still stayed above minimum capital requirements under a scenario that implied industry losses of more than $708 billion.

But unlike in prior years, this result will not affect banks' capital requirements. The Fed previously said it would keep the stress capital buffer unchanged through 2027 while it reforms the test methodology. Because the regulatory path is already clear, banks began Wednesday knowing their capital requirements.

Although analysts had expected limited short-term market impact from the test, banks still moved ahead with higher payouts amid regulatory uncertainty, reflecting a degree of confidence.

Before the results were released, KBW described this year's stress test as a “procedural exercise” and said investors were more focused on the Basel III Endgame proposal expected later this year than on the Fed's annual routine test.