Goldman Says Options Show Top U.S. Bank Dividends May Fall 30%
- Average dividend increase was 10% before Covid-19 pandemic
- Wells Fargo and Citigroup most likely to cut their dividends
The Citigroup Inc. headquarters stands in New York, U.S.
Photographer: Victor J. Blue/Bloomberg
This article is for subscribers only.
Options are pricing in odds that the seven top U.S. banks will cut their dividends by an average of 30%, according to an analysis by Goldman Sachs.
Analysts led by Richard Ramsden wrote that the options market had been pricing in a 10% increase in bank dividends before the Covid-19 pandemic hit. They say options are now implying Wells Fargo and Citigroup will have the two largest dividend cuts in 2021, at 65% and 44%, respectively. Goldman said options showed Morgan Stanley may cut its dividend by 29%, the smallest in the top seven.