JPMorgan Chase & Co. (NYSE:
JPM) is one of the few banking companies that have paid dividends despite facing the subprime carnage. Recently, the company has declared a quarterly dividend of $0.05 per share which is payable on October 31, 2009, to stockholders of record at the close of business on October 6, 2009. The company has also declared dividends for the Preferred Stock Series E, F, G, and I. However, the dividends have declined from $0.38 per quarter in 2008 to $0.05 per quarter in the first half of 2009. It was the first time since 1990 that the bank or its predecessors had cut the dividend. The reduction was expected to save the bank $5 billion a year. Since, financial markets and job market look like returning to normal conditions, is there a prospect of dividend rise in the next two quarters of 2009? Is the future outlook bright for the company?
Generally, the company keeps its dividend amount unchanged in a fiscal year. There is no reason to believe that the company would change that policy in the remainder of 2009 as well. However, the prospect of dividend hike in 2010 looks a certainty as its future outlook is bright despite few concerns.
Key positives
Opportunities in commercial real estate market
JPMorgan Chase exposure to commercial real estate market is quite low when compared with large regional banks. So, the company is evaluating the possibility of acquiring assets in the battered commercial real estate market. The company's exposure to:
The downturn of the commercial real estate sector is typically the third and final leg of an ongoing credit cycle preceded by securities writedowns and then consumer losses.
