US Bancorp Declares SCB & Plans Dividend Hike After 2026 Stress Test

Following the release of the Federal Reserve's 2026 stress test, U.S. Bancorp USB outlined its planned capital actions and reaffirmed its strong capital position. According to the Fed’s stress test results released yesterday, USB is among the 32 U.S. banks that successfully passed the test.Based on the 2026 stress test results, USB's stress capital buffer (SCB) would have been subject to the regulatory floor of 2.5%. However, as announced by the Fed in February 2026, stress test-related capital buffer requirements will remain unchanged through 2027 while the agency reviews public feedback on its supervisory models. As such, the company's SCB will remain unchanged at 2.6% until Oct. 1, 2027.Including the Basel III minimum common equity Tier 1 (CET1) capital requirement of 4.5%, USB is also required to maintain a CET1 ratio of at least 7.1%. As of March 31, 2026, the company's CET1 ratio was 10.8%, significantly above the required minimum level. This underlines the capital strength of USB and enables the bank to undertake organic growth initiatives and continue capital payouts.As part of its planned capital actions, U.S. Bancorp intends to raise its quarterly common stock dividend by 3.8% to 54 cents per share from 52 cents, subject to board approval. The higher dividend is expected to become effective in the third quarter of 2026.Based on yesterday's closing price of $60.10, its current dividend yield stands at 3.5% compared with the industry's 2.7%. Over the past five years, the company has increased its dividend five times.Dividend YieldImage Source: Zacks Investment ResearchApart from dividends, USB continues to return capital through share repurchases. In September 2024, the board authorized a share repurchase program of up to $5 billion of common stock. As of March 31, 2026, nearly $4.1 billion remained available under the authorization.U.S. Bancorp also maintains a decent liquidity position. As of March 31, 2026, cash and due from banks were $48.4 billion, while short-term borrowings and long-term debt totaled $17.9 billion and $61.4 billion, respectively.Driven by strong capital levels, earnings strength and solid liquidity, USB is expected to sustain its capital distribution activities and continue enhancing shareholder value. The planned dividend increase and significant remaining share repurchase capacity reflect management's confidence in the company's financial position and long-term growth prospects.Other Firms Set to Raise Dividends After 2026 Stress TestSome other participants from the stress test that are enhancing capital distribution plans following the results are Wells Fargo WFC and Goldman Sachs GS.Wells Fargo intends to raise its third-quarter 2026 common stock dividend by 11% to 50 cents per share from 45 cents, subject to board approval.  Goldman Sachs plans to increase its quarterly common dividend by 11% to $5 per share from $4.50 beginning July 1, 2026, subject to approval at its scheduled third-quarter board meeting.USB’s Price Performance and Zacks RankOver the past six months, shares of US Bancorp have rallied 9.3% compared with the industry’s growth of 12.5%.Price PerformanceImage Source: Zacks Investment ResearchCurrently, the company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.See Stocks Now >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks