US Banks Raise Shareholder Payouts After Passing Fed Stress Tests

Several of the largest US banks have announced higher dividends and fresh share buyback plans after the Federal Reserve (Fed) concluded they were well placed to withstand a severe economic downturn.

The Fed's annual stress test — said to be tougher than 2025’s test — found that all 32 participating banks would remain above minimum capital requirements even under a hypothetical recession featuring 10% unemployment, sharp falls in commercial (39%) and residential (30%) property prices, and significant market disruption.

Collectively, the banks were projected to absorb more than $700 billion in losses while continuing to lend to households and businesses.

The positive outcome of the stress test cleared the way for banks to return more capital to shareholders, with several major lenders moving quickly to announce larger payouts.

JPMorgan Chase increased its quarterly dividend to $1.65 a share from $1.50 and approved a new $50 billion share repurchase program, while Goldman Sachs raised its quarterly dividend 11% to $5.00 a share.

Meanwhile, Morgan Stanley lifted its payout 15% to $1.15 and authorized a new $20 billion buyback plan, while Citigroup increased its dividend 12% to 67 cents a share and said it would continue its existing $30 billion repurchase program.

Finally, Bank of America said it would determine its next dividend after its board meets next month while maintaining its $40 billion buyback authorization.

Unlike previous years, this year's stress test will not affect banks' capital requirements. This is because of the Federal Reserve’s decision in February to freeze its stress capital buffer requirements until 2027, thus allowing lenders to increase capital returns.