Morgan Stanley Announces 7.5 Cents Dividend Increase and Authorization of a Renewed $20 Billion Multi-Year Common Equity Share Repurchase Program

Rhea-AI Summary

Morgan Stanley (NYSE: MS) has announced a quarterly dividend increase to $0.925 per share, up from $0.85, effective from Q3 2024. This marks the third consecutive annual dividend rise. Additionally, the firm revealed a renewed share repurchase program worth up to $20 billion, also starting in Q3 2024, with no set expiration date. The buyback will be executed based on market conditions and the firm's capital position. CEO Ted Pick highlighted the firm's strategic capital management. Following the Federal Reserve's CCAR 2024 results, Morgan Stanley expects a Stress Capital Buffer of 6.0% from October 1, 2024, to September 30, 2025, leading to a CET1 ratio of 13.5%. The firm's CET1 ratio was 15.0% as of March 31, 2024.

Positive

• Morgan Stanley has increased its quarterly dividend by $0.075, reflecting confidence in its business model.
• The firm authorized a $20 billion share repurchase program, potentially enhancing shareholder value.
• Morgan Stanley's CET1 ratio of 15.0% as of March 31, 2024, indicates a strong capital position.

Negative

• Morgan Stanley will have a Stress Capital Buffer of 6.0% from October 1, 2024, to September 30, 2025, potentially limiting capital allocation flexibility.

Insights

Financial Analyst

Morgan Stanley's decision to increase its quarterly dividend from $0.85 to $0.925 per share signals strong confidence in its financial stability and future earnings capacity. For retail investors, this means an attractive yield on their investment, reflecting consistent performance and sound capital allocation strategies.

The $20 billion share repurchase program is another positive indicator for shareholders. Share buybacks often help in improving earnings per share (EPS), as they reduce the number of shares outstanding. This typically results in a higher stock price in the long term, assuming steady or growing profits.

It's also worth noting the Stress Capital Buffer (SCB) of 6.0% set by the Federal Reserve, which Morgan Stanley expects to adhere to from October 2024. This SCB, in combination with other regulatory capital requirements, suggests that Morgan Stanley maintains a solid capital position. Their 15.0% Common Equity Tier 1 (CET1) ratio as of March 31, 2024, significantly exceeds the 13.5% requirement, indicating robust financial health.

In summary, the dividend increase and sizable share repurchase program should enhance shareholder value. However, investors should also consider external economic conditions and regulatory changes that might impact future performance.

Market Research Analyst

The announcement of a renewed $20 billion share repurchase program can be seen as a strategic move to bolster investor confidence and support Morgan Stanley's stock price. Share repurchase programs are often utilized by companies to signal that their stock is undervalued, thus making a statement about the firm's confidence in its intrinsic value.

Furthermore, the 7.5 cents increase in dividends aligns well with the firm's historical trend of returning capital to shareholders. This move may attract income-focused investors looking for reliable dividend growth.

From a broader market perspective, this announcement might drive short-term positive sentiment in Morgan Stanley's stock. However, potential investors should be aware of the timing and execution of these buybacks, as market conditions and economic outlooks evolve. The flexibility in the repurchase program's timeline allows Morgan Stanley to adapt to market conditions, but it also introduces uncertainty regarding the exact impact on share prices.

Overall, these actions reinforce a shareholder-friendly strategy, yet investors should stay vigilant about the broader economic landscape that could influence the sustained effectiveness of these measures.

Regulatory Expert

The Stress Capital Buffer (SCB) of 6.0% and a CET1 ratio of 15.0% indicate strong regulatory compliance and a well-capitalized balance sheet for Morgan Stanley. The SCB is a critical component of regulatory capital requirements, ensuring that the firm can withstand economic downturns and financial stresses.

Morgan Stanley's ability to exceed the required CET1 ratio demonstrates prudent risk management and regulatory adherence. This is particularly reassuring for investors, as it suggests the firm is less likely to face capital shortfalls in volatile market conditions.

However, investors should be mindful of the evolving regulatory landscape, which can impact capital requirements and, consequently, the firm's ability to return capital through dividends and buybacks. The Federal Reserve's annual stress tests and resulting capital buffers are essential tools for maintaining financial stability, but they can also impose constraints on capital distributions during periods of heightened economic uncertainty.

NEW YORK--(BUSINESS WIRE)-- Morgan Stanley (NYSE: MS) announced that it will increase its quarterly common stock dividend to $0.925 per share from the current $0.85 per share, beginning with the common stock dividend expected to be declared by the Firm’s Board of Directors in the third quarter of 2024.

In addition, the Firm’s Board of Directors reauthorized a multi-year common equity share repurchase program of up to $20 billion, without a set expiration date, beginning in the third quarter of 2024. The share repurchases will be exercised from time to time at prices the Firm deems appropriate, subject to various considerations, including current market conditions, the Firm’s capital position and future economic and earnings outlook.

Ted Pick, Chief Executive Officer of Morgan Stanley, said, “These results demonstrate continued execution of a clear and consistent strategy to raise, manage and allocate capital for clients. We are raising our dividend by 7.5 cents for the third year in a row reflecting the durability of Morgan Stanley's business model.”

On June 26, 2024, the Board of Governors of the Federal Reserve System released its CCAR 2024 results, as a result of which Morgan Stanley expects to be subject to a Stress Capital Buffer (SCB) of 6.0% from October 1, 2024 to September 30, 2025. Together with other features of the regulatory capital framework, this SCB results in an aggregate U.S. Basel III Standardized Approach Common Equity Tier 1 (CET1) ratio of 13.5%. The Firm’s U.S. Basel III Standardized Approach CET1 ratio was 15.0% as of March 31, 2024.

Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in 42 countries, the Firm's employees serve clients worldwide including corporations, governments, institutions and individuals. For more information about Morgan Stanley, please visit www.morganstanley.com.

Forward-Looking Statements

This Release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, which reflect management’s current estimates, projections, expectations, assumptions, interpretations or beliefs of Morgan Stanley’s future results, regulatory capital levels and future capital actions, including common stock dividends and common equity share repurchases, and which are subject to risks and uncertainties that may cause actual results to differ materially. Morgan Stanley does not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of forward-looking statements. For a discussion of additional risks and uncertainties that may affect the future results, regulatory capital levels and future capital actions of Morgan Stanley, please see “Forward-Looking Statements” preceding Part I, Item 1, “Competition” and “Supervision and Regulation” in Part I, Item 1, “Risk Factors” in Part I, Item 1A, “Legal Proceedings” in Part I, Item 3, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and “Quantitative and Qualitative Disclosures about Risk” in Part II, Item 7A, in Morgan Stanley’s Annual Report on Form 10-K for the year ended December 31, 2023 and other items throughout the Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, including any amendments thereto.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240628742639/en/

Media Relations: Wesley McDade, 212.761.2430

Investor Relations: Leslie Bazos, 212.761.5352

Source: Morgan Stanley

FAQ

What is the new quarterly dividend for Morgan Stanley (MS)?

Morgan Stanley's new quarterly dividend is $0.925 per share, up from $0.85, starting Q3 2024.

How much is Morgan Stanley's share repurchase program?

Morgan Stanley authorized a $20 billion share repurchase program beginning Q3 2024.

When will Morgan Stanley's new dividend rate take effect?

The new dividend rate will take effect in Q3 2024.

What is the Stress Capital Buffer for Morgan Stanley (MS) for 2024-2025?

Morgan Stanley expects a Stress Capital Buffer of 6.0% from October 1, 2024, to September 30, 2025.

What is Morgan Stanley's CET1 ratio as of March 31, 2024?

Morgan Stanley's CET1 ratio was 15.0% as of March 31, 2024.