AIG’s Return to Dividends: Another Feather in Financials’ Cap

by Marc Bastow | August 2, 2013 11:25 am

It’s been a long, hard road back for the financial sector since its meltdown in 2008-09. And perhaps no institution has had as difficult a time — nor been as associated with the mess — as American International Group (AIG[1]), one of the first firms, along with now-defunct¬†Bear Stearns, to require government assistance to survive.

However, both the government and now shareholders have been rewarded for their patience (and money). AIG last year paid off its remaining $183 billion, and yesterday the company announced it will pay a dividend[2] for the first time since 2008.

AIG’s new payout comes on the heels of a boffo second quarter in which it grew profits 38% to $1.84 per share. The payout will be 10 cents quarterly, for a yield of 0.8% on current prices, with the first dividend to be paid Sept. 26 to shareholders of record as of Sept. 12

In addition to the dividend, AIG’s board authorized the repurchase of $1 billion in stock.

AIG now joins a group of major financial institutions including JPMorgan (JPM[3]) and Wells Fargo (WFC[4]) that have returned to income investors’ good graces after slashing or suspending dividends in the wake of the financial crisis. Specifically, WFC now pays out 30 cents after cutting its dividend from 34 cents to 5 cents in 2009, and JPM has returned to its pre-crisis payout of 38 cents just a few years after dropping to a nickel quarterly.

More broadly speaking, the Financial SPDR (XLF[5]) has gone from paying just 16 cents in 2009 to 29 cents in 2012.

The financial sector still has its share of problems, and government regulators are always on the lookout to avoid the next crisis, but for now, it’s an increasingly attractive place to put your money.

Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities. 

Endnotes:
  1. AIG: http://studio-5.financialcontent.com/investplace/quote?Symbol=AIG
  2. will pay a dividend: http://investorplace.com/2013/08/aig-to-resume-dividends/
  3. JPM: http://studio-5.financialcontent.com/investplace/quote?Symbol=JPM
  4. WFC: http://studio-5.financialcontent.com/investplace/quote?Symbol=WFC
  5. XLF: http://studio-5.financialcontent.com/investplace/quote?Symbol=XLF

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