Sitting in IBD’s Dividend Leaders screen, dividend stock U.S. Bancorp (USB) is in focus as a stable choice with solid dividend growth.
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U.S. Bancorp, headquartered in Minneapolis, Minn., is the seventh largest bank in the U.S., with $668 billion in assets and over 2,200 branches primarily across the Midwest.
Originally incorporated in 1863, U.S. Bancorp is the second oldest bank operating in the nation, only behind Wells Fargo (WFC).
What separates U.S. Bancorp from its large cap bank rivals is its dividend. With an annualized yield of 4.6%, U.S. Bancorp provides a dividend well above any of the top five banks and over three times the 1.4% average yield of the S&P 500.
U.S. Bancorp’s current 49 cent quarterly dividend has grown at a steady pace, having increased for 13 straight years. It has a solid five-year dividend compound annual growth rate of 7.6%.
For conservative investors, U.S. Bancorp’s mature business is a strong choice. This security can be illustrated through a debt rated at A from S&P Global, firmly in investment grade.
Results For Dividend Stock Stable, But Lack Growth
Financial results have also been stable, though muted. U.S. Bancorp reported fourth-quarter earnings that met expectations. EPS came in at 99 cents on revenue of $6.76 billion. For the full year, EPS fell slightly to $4.31 from $4.46 in 2022. This year, earnings are expected to further fall to $3.97 before recovering to $4.39 per share in 2025.
Amid strong competition, attracting new clients has been a challenge for the bank. U.S. Bancorp lost 1% of deposits in the fourth quarter. Higher interest rates have also taken their toll on loan demand, which has also turned weaker. Through these headwinds, the bank has been proactive in reducing leverage ratios, in preparation of further weakness.
The dividend stock is finding support at the 50-day moving average as it forms a flat base. A 45.85 buy point is identified by MarketSmith pattern recognition.
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