Don't Bank on More Dividend Boosts

Wells Fargo has not been immune to the soured housing market and deteriorating home prices, particularly related to its home equity portfolio. Yet it has nonetheless remained relatively unscathed through the credit crisis. In the quarter, Wells Fargo took a $3 billion provision charge to cover against $1.5 billion of net charge-offs -- flat from the first quarter -- and an additional $1.5 billion reserve, primarily related to its struggling home equity portfolio, it said.

Still, some analysts remain cautious regarding Wells' dividend decision.

"By raising the dividend by 10%, Wells is clearly trying to convey its confidence in its capital position to the market, which is boosting the stock this morning," writes Keith Horowitz, an analyst at Citigroup, in a note on Wednesday. "While we agree its capital position is strong, we don't view this as prudent move in front of an increasingly difficult environment, plus we believe a better use for that capital is for [Wells Fargo] to redeploy that capital in high return businesses that would help its long term outlook."