Canaccord Genuity Morning Coffee on Citigroup (C): Bringing It Back
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Price: $58.32 --0%
Rating Summary:
24 Buy, 13 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 13 | New: 10
Rating Summary:
24 Buy, 13 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 13 | New: 10
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Canaccord Genuity Morning Coffee on Citigroup (NYSE: C): Bringing it back.
Canaccord analyst says, "After an early morning rally, shares of Citigroup fell after the third-largest U.S. bank announced it will be implementing a 1-for-10 reverse stock split of common shares as of May 9, 2011 and that it will reinstate a quarterly dividend of $0.01 per share beginning in Q2/11. The dividend will be the first paid to investors since 2009 when Citigroup eliminated its dividend while many banks reduced theirs. The announcement follows Friday’s news from the Federal Reserve that it was allowing some banks to increase the amount of funds they return to shareholders following a stress test on the health of big banks’ capital. One analyst notes that while the dividend is small, it is a vote of confidence from the Fed. Credit Suisse sees the dividend reinstatement as a positive in regards to Citigroup’s relationship with regulators, and believes that while the payout on adjusted EPS is nominal, they expect an increase in the dividend to a more normalized 20% payout ratio sometime in 2012. The brokerage says that while the reverse split does not change the underlying fundamentals of the stock, it may make shares more attractive to a subset of investors. Reducing the number of shares may draw institutional investors to the stock as trading costs will be reduced and the dividend will open the door for mutual fund companies to purchase the stock if they had been restricted from buying non-dividend paying stocks. Some individual investors are not happy with the reverse split as reverse splits can indicate a poor outlook for a company. Additionally, the increased price and reduced number of outstanding shares may reduce trading volume for a stock that is frequently near the top end of volume on a daily basis."
Canaccord analyst says, "After an early morning rally, shares of Citigroup fell after the third-largest U.S. bank announced it will be implementing a 1-for-10 reverse stock split of common shares as of May 9, 2011 and that it will reinstate a quarterly dividend of $0.01 per share beginning in Q2/11. The dividend will be the first paid to investors since 2009 when Citigroup eliminated its dividend while many banks reduced theirs. The announcement follows Friday’s news from the Federal Reserve that it was allowing some banks to increase the amount of funds they return to shareholders following a stress test on the health of big banks’ capital. One analyst notes that while the dividend is small, it is a vote of confidence from the Fed. Credit Suisse sees the dividend reinstatement as a positive in regards to Citigroup’s relationship with regulators, and believes that while the payout on adjusted EPS is nominal, they expect an increase in the dividend to a more normalized 20% payout ratio sometime in 2012. The brokerage says that while the reverse split does not change the underlying fundamentals of the stock, it may make shares more attractive to a subset of investors. Reducing the number of shares may draw institutional investors to the stock as trading costs will be reduced and the dividend will open the door for mutual fund companies to purchase the stock if they had been restricted from buying non-dividend paying stocks. Some individual investors are not happy with the reverse split as reverse splits can indicate a poor outlook for a company. Additionally, the increased price and reduced number of outstanding shares may reduce trading volume for a stock that is frequently near the top end of volume on a daily basis."
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