Sanford C. Berstein & Co. Said Merrill Lynch (MER) Should Drastically Reduce Dividend
More News related to GS
- Goldman Sachs (GS) volatility low into Q2 EPS and transaction outlook
- Matthew Barrett, Ann Kaplan and Thomas Melzer Appointed to Goldman Sachs (GS) USA Board
- Matthew W. Barrett, Ann F. Kaplan and Thomas C. Melzer Appointed to Goldman Sachs Bank USA Board
- Goldman Sachs Conference Call to Announce Second Quarter 2009 Results
- Dividend Increases At Record Low, Dividend Cuts Highest In Over 50 Years
More News related to LEH
- Einhorn's Greenlight Gets Very-Long Gold (GLD, GDX), Also Likes Solar (JASO, WFR) and Other Energy (AYE, PCX, PTEN)
- Top 15 For 2008 (No. 3): Bank Runs
- Top 15 For 2008 (No. 14): M&A Wreckage
- Barclays (BCS) To Raise $9.7B In Capital From Middle East Investors
- Citadel Has Billions In Credit, Tries To Reassure Investors
More News related to MER
- The Securities Law Firm of Klayman & Toskes Files Arbitration Claim Against UBS On Behalf of 69 Year Old Widow Whose Account Was Over-Concentrated in Preferred Financial Stocks -- UBS
- NY AG Cuomo Sends Letter To Regulators On BofA/Merrill; Officials Threatened To Replace Lewis and Board
- Merrill Lynch: Bankers Deserve $10 Million
- NY AG Cuomo Said Merrill "Secretly and Prematurely" Awarded $3.5B In Bonuses Before Merger
- U.S. Close To Giving New Aid To Bank of America (BAC)
More News related to Analyst Comments
- Deutsche Bank Issues Rating and Price Target Changes In Metals and Mining (FCX, CDE, PCU, TC)
- UBS Lifts Price Target on Silver Standard (SSRI), Lowers Targets on Silver Wheaton (SLW), Yamana (AUY)
- Barron's Article Comments on Foot Locker (FL); Sees Shares Moving to $15 if Climate Improves
- Piper Jaffray Reiterates an 'Overweight' Rating on F5 Networks (FFIV); Raises Price Target
- Merriman Curhan Boosts Price Target Range on Dendreon (DNDN) to $49-$50
Sanford C. Bernstein & Co. analyst Brad Hintz said that Merrill Lynch & Co. (NYSE: MER) should reduce its common dividend to 50 cents per share from $1.40, which would lower payments to shareholders by $1.54 billion in 2010.
The Bernstein analyst believes that the dividend adds unneeded pressure to Merrill which already has a high dividend payout ratio. "The high dividend payout ratio will place unnecessary constraints on its inventory and balance sheet capacity, will limit Merrill's ability to compete effectively in fixed income proprietary trading, said Hintz.''
Merrill Lynch's capital raising efforts has increased shares outstanding by 87% in the past nine months, raising the cost of the dividend from $1.49 billion to $2.9 billion. However, concurrently, Merrill's "earnings power has decreased dramatically.''
Merrill's CEO John Thain told Maria Bartiromo that it is tough for Merrill Lynch to drop the dividend because so many employees rely on the dividend as large source of their income. Hmm, I thought that's why they get those big cash bonuses at the end of the year.
Without reducing the dividend, Merrill would pay about 65% of 2009 and 2010 earnings in the form of common and preferred dividends, which is more than twice Merrill's historical average from 1999 to 2006. Additionally, he estimates the dividend payout ratio would be more than twice the ratios of Lehman Brothers (NYSE: LEH), Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: GS).
Subscribe to EasyStockAlerts.com & Get real-time e-mail alerts when news hits your stocks!
Related Categories
Analyst CommentsInsiders' Blog
Rumors
Stocks Mentioned
+112.77Related Entities
- UBS
- Goldman Sachs
- Morgan Stanley
- Merrill Lynch
- Lehman Brothers
- Sanford C. Bernstein
- Maria Bartiromo
- John A. Thain
- Dividend
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
