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KeyCorp (KEY) Rewards Shareholders With 5.4% Dividend Hike

KeyCorp KEY has announced a hike in the quarterly dividend. The bank announced a dividend of 19.5 cents per share, representing a hike of 5.4% from the prior payout. The dividend will be paid out on Dec 15 to shareholders on record as of Nov 30.

Earlier in July, KeyCorp had announced plans to hike dividend, effective fourth-quarter 2021, subject to board of directors’ approval. It must be noted that last year amid the coronavirus-induced economic slowdown, the Federal Reserve had restricted capital distributions by major banks like KEY and JPMorgan JPM to conserve liquidity.

Considering last day’s closing price of $23.67 per share, KeyCorp’s dividend yield currently stands at 3.30%. Not only is the yield attractive for income investors but it also represents a steady income stream. Further, the yield is impressive compared with the industry average of 2.47%.

In addition to paying dividends, the company has an impressive share-repurchase plan in place. In July, KeyCorp had announced a new share buyback authorization of up to $1.5 billion through the third quarter of 2022. This replaced the remaining capacity under the previous authorization that was announced in January 2021. Further, in September, the bank entered into an accelerated share repurchase program under which it inked an agreement with a large investment bank to buy back up to $585 million worth of shares.

Apart from these, KeyCorp has been undertaking business restructuring efforts to further enhance operating efficiency. In March, the company acquired data analytics-driven consultancy firm, AQN Strategies LLC. These, along with several other past buyouts, are expected to keep enhancing its profitability and market share, and help diversify revenues.

Also, as demand for digital banking services continues to rise, KeyCorp has consolidated 73 branches since the beginning of 2021, with management continuing to look for opportunities to right-size its footprint.

So far this year, shares of KeyCorp have jumped 44.2%, outperforming 37.7% rally recorded by the industry it belongs to.

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Currently, KeyCorp carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Similar Steps by Other Banks

Earlier this week, M&T Bank Corporation MTB announced a dividend per share of $1.20, marking an increase of 9.1% from the prior payout. The dividend will be paid out on Dec 31 to shareholders on record as of Nov 30.

Since the 2008 financial crisis, when it paid out a dividend of 70 cents per share, M&T Bank has come a long way in displaying its capital and balance sheet strengths. Prior to this hike, MTB had raised the quarterly dividend by 10% in November 2019 to $1.10 per share.

Last month, Bank OZK OZK declared a quarterly cash dividend of 29 cents per share, reflecting a rise of 1.8% from the prior payout. The dividend was paid out on Oct 22 to shareholders on record as of Oct 15.

This was the 45th consecutive quarter of a dividend hike by Bank OZK. Prior to this, the company hiked its dividend by 1.8% to 28.5 cents per share in July. We believe that such disbursements highlight OZK’s operational strength and commitment toward enhancing shareholder wealth.

In September, JPMorgan announced a dividend of $1 per share, representing a hike of 11.1% from the prior payout. The dividend was paid out on Oct 31 to shareholders on record as of Oct 6.

In addition to paying regular dividends, JPMorgan has an efficient share buyback plan in place. For 2021, JPM authorized to repurchase shares worth up to $30 billion.

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