A payoff for financial exchange traded funds (ETFs) might not be far off if the earnings for financial institutions continue to be as strong as they have been.
Some of the biggest banks are ready to begin restoring their dividends in the first half of the year. This comes after a three-year pause to repair their damaged balance sheets, report Nelson D. Schwartz and Eric Dash for The New York Times. [Bigger Is Better in Financial ETFs Now.]
Earnings reports have come from banks such as JP Morgan Chase (NYSE: JPM), Bank of America (NYSE: BA), Citigroup (NYSE: C), Goldman Sachs (NYSE: GS) and Wells Fargo (NYSE: WFC). While some have been better than others, here’s what the improvement really means:
- If the big banks deliver a second straight year of rising profits, the conditions would be in place for regulators to approve dividend increases by as early as March.
- The reversal could put billions of dollars in the pockets of pension funds and retirees.
- The earnings reports for the fourth quarter of 2010 have so far shown that corporate and consumer lending is starting to come back while losses on bad loans are continuing to ease. [Bargain Shopping With Financial ETFs.]
Keep an eye on those dividend ETFs, because they could soon become a lot more appealing.
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.