Bank Dividends Ready to Roar: How to Take Full Advantage
Published Apr 8, 2011 on Seeking Alpha

PNC Financial Services Group (PNC) just announced that it will raise its quarterly dividend payout from $0.10 to $0.35 per share. In addition, the bank plans on spending as much as $500 million to repurchase shares in 2011. For the financial industry, this is another positive sign for the increasing health of bank balance sheets. The management's decision to repurchase shares may also be very bullish for equity holders, as this sends a clear signal that PNC's management views the stock as a undervalued.Stronger Than It AppearsWhile the $0.35 quarterly dividend is a nice increase, it hides the company's true implied dividend paying capacity. PNC is allocating $500 million to share buybacks, but if the company had allocated the $500 toward dividend payments, with 525.51 million shares outstanding, it could have paid an additional $0.2379/share. In other words, if it had focused excess capital into dividends, it could... Read more