The approval by the Federal Reserve of JPMorgan Chase & Co.’s (NYSE: JPM – $61.56) capital plan in the regulator’s annual stress test, cleared the way for the firm to reward investors by returning capital either through dividend payouts by buying back stock, or both. The bank said that its capital plan now includes gross common equity repurchases of up to $10.6 billion between July 1, 2016, and June 30, 2017. That compares to around $8 billion expected from some analysts. It also plans to continue its current common stock dividend of 48 cents a share for the third quarter, already an increase from prior quarters. The largest U.S. bank by assets has been shrinking over the past year in efforts to become simpler and less sprawling as new capital regulations are set to roll out in the coming years. That has, in part, allowed it to boost its quarterly dividend last month to the current annual rate of $1.92 per share, yielding investors 2.9%.
The company has put a lot of pesky legal matters behind it since 2008, but still faces meaningful regulatory pressures. Nonetheless, the shares have bounced back nicely after the Brexit mess, advancing some 8.5% since Monday’s lows. Positions in JPM can continue to be held in a well-diversified aggressive portfolio for exposure in the volatile banking sector.