2 of our banks just boosted their dividends. Here's how their increases stack up versus our other names

CNBC

20 hours ago

Goldman Sachs and Wells Fargo shares hit record highs Wednesday after the Wall Street banks announced dividend hikes following Tuesday's close. Both join the laundry list of Club holdings to hike their payouts to investors in 2025. After the financial firms passed the Federal Reserve's annual stress test on Friday night, Goldman said Tuesday that it is raising its quarterly dividend payout to $4 a share from $3. That's a 33% increase and the largest among the 15 portfolio names that boosted their dividends so far this year. Meanwhile, Wells Fargo hiked its quarterly payout by 12.5% to 45 cents from 40 cents. The dividend hikes by Goldman and Wells – along with the other Club stocks that boosted their distributions in the first six months of the year – are generally positive signs for investors. A dividend increase requires a company to distribute more profit to shareholders. It typically means management has a strong enough conviction in cash flow to support the bigger payout over time. Case in point: Shares of Goldman and Wells Fargo jumped nearly 1.5% and 1%, respectively, Wednesday. This follows 13 other Club holdings raising their dividends earlier this year. After Goldman, Danaher had the biggest dividend hike on a percentage basis at 18.5%. The company announced in February that it would raise its quarterly payout to 32 cents a share from 27 cents. Eaton, Texas Roadhouse and Costco also boosted their contributions to shareholders in recent months by double-digit percentages. Here's a full list of the Club holdings that raised dividends in 2025, including those not mentioned earlier like Home Depot, Meta Platforms, Linde, Apple, BlackRock, Salesforce, Coterra and DuPont. Currently, the vast majority of our Club holdings – 27 out of 30 – pay out dividends. The only three that do not are Amazon, CrowdStrike and Palo Alto Networks. For its part, Nvidia's is miniscule, at only 1 cent a share. Of course, dividends are only one factor to consider when deciding whether to invest in a stock. For most of our names, their annualized yields are fairly small in the grand scheme of things. Consider Meta Platforms , which last year began to pay a dividend for the first time in its history. In February of this year, the social media giant boosted its quarterly dividend to 52 cents a share from 50 cents, which translates to an annualized yield of 0.29%, as of Tuesday's close. Still, the stock is trading near record highs on Wednesday. Shares of the Facebook parent are up 22% year to date, versus the tech-heavy Nasdaq Composite's roughly 5.5% advance. However, when there's steady dividend growth alongside share price appreciation, it can improve total returns over time. That is true even for stocks typically not coveted for their large payouts, such as Texas Roadhouse, which supports a 1.44% yield. Over the past 10 years, the stock is up around 404% on a price return basis — and 494% on a total return basis. Indeed, to capture the benefits of compound interest, we strongly recommend members reinvest their dividends . So, who is next? We're expecting that additional portfolio companies will announce dividend hikes in 2025. Eli Lilly raised its dividend by 15% last December, which was the seventh consecutive annual increase of that magnitude. We hope to see this again in the second half of the year. Meanwhile, Microsoft and Honeywell have in recent years announced dividend increases in the month of September. And while Capital One did not raise its dividend like its portfolio banking peers Tuesday, management is expected to announce some updated return of capital to shareholders later this year. In fact, Truist analysts said Monday that the credit card issuer has $15 billion of excess capital. That's roughly 11% of the company's market capitalization. Still, Jim Cramer believes the company will also invest back in the business. "I think [CEO] Richard Fairbank can take some of that capital and really make it into the rival of American Express ," Jim said during Wednesday's Morning Meeting . This follows Capital One's big acquisition of Discover Financial — which was a key reason why the Club initiated a position in the financial stock, which is on pace for its 10th straight day of gains. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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