NEW YORK, NY -- (Marketwire) -- 05/09/11 -- Investors are once again looking to major US banks as safe companies that will post steady profits and once again pay steady dividends. While certain major banks have said dividend increases are a top priority, others argue that now is not the right time to return cash to shareholders. The Bedford Report examines the outlook for companies in the Financial Sector and provides research reports on Bank of America Corporation (NYSE: BAC) and Citigroup, Inc. (NYSE: C). Access to the full company reports can be found at:
Citigroup's decision to boost its dividend by a mere one tenth of a cent has drawn significant criticism from shareholders. At Citi's annual shareholder's meeting, one shareholder called it insulting, as others pushed for the company to return more capital through higher dividends and share buy-backs. CEO Vikram Pandit says the bank will begin retuning capital next year, stating that the dividend would enable more funds to buy Citi shares.
Several Citigroup shareholders also criticized the bank's decision to carry out a one-for-ten reverse stock split, which will knock down its overall trading volume. Management believes the move will attract more institutional investors that were not permitted to buy shares under five dollars. NASDAQ executive, Eric Noll says that Citigroup -- previously a favorite among retail investors looking for cheap stocks -- could see its volumes drop twenty percent.
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In March Bank of America received news that the Federal Reserve rejected the bank's plan to increase its dividend in the second half of 2011. The bank said it had originally submitted its dividend intentions to the Fed in January which outlined a proposal to maintain its current payout for the first two quarters of the year and then institute a modest increase.
Following the news, BofA CEO Brian Moynihan told shareholders that the bank plans "to put in place a prudent capital management strategy in the near future that, pending regulatory approvals, includes a higher dividend and stock repurchases."
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