July 15, 2010
Good news today from JP Morgan, which reported a second-quarter profit of $4.8 billion. Morgan has been among the best-managed banks, keeping a cautious conservatism throughout the financial crisis. The giant bank sailed through it all a bit bruised but better positioned for having held to the kind of prudent practices that, had other banks observed them as scrupulously, would have kept the Great Recession much shallower or maybe nonexistent.
So I have little complaint for JP Morgan - just this plea: remember your shareholders, the owners of your company. Big banks, including Morgan, have defended their practice of paying big bonuses to their employees. And you should reward those responsible for the company's success, especially in the case of JP Morgan. But owners should share in that success. During the financial crisis many banks slashed cash dividends to shareholders, in Morgan's case the reduction was 87%. The CEO, James Dimon, is hedging, waiting for the legislative air to clear. But now that earnings (and employee bonuses) are flowing again, it's time to reward the owners for their patience.
Mr. Dimon: raise your dividend.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).