In US if any company raises their dividend, it indicates good days ahead for that company, so shall we consider Wells Fargo's raising dividend pay as revival to US financial sector? HBJ Capital doesn't think so.
Wells Fargo gave anxious investors a pleasant surprise Wednesday, reporting a profit drop that was milder than anticipated and lifting its quarterly dividend by 10 percent.
Wells Fargo's second-quarter profit fell 22 percent as more customers at the nation's fifth-largest bank failed to pay back their loans. But it raised its dividend to 34 cents from 31 cents -- at a time when many other financial institutions are slashing theirs to preserve capital.
The San Francisco-based company's shares soared $4.63, or 22.5 percent, to $25.14 by midday, after tumbling alongside other financial stocks over the last several days on worries about more U.S. mortgage losses and bank failures.
"This is the first fairly positive data point that we've had for the banking industry -- we haven't seen any really strong results in the first half," said Byron MacLeod of Gradient Analytics. "This is where you're going to begin to see some stratification between those that are conservatively positioned, and those that aren't."
While Wells Fargo's results appeared to cheer up its shareholders Wednesday, the bank is not exactly coasting.
The mortgage lending climate remains tough, but Wells Fargo managed to keep total retail mortgage originations at $31 billion, the same as last year, despite tightening its pricing and underwriting standards.
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