Shares of shares of JPMorgan Chase (JPM) will trade ex-dividend Monday, April 4. To qualify for a dividend check, investors must own shares of the New York-based bank before Monday, when JPMorgan management finalizes its roster of shareholders to whom it will mail dividend checks.
JPMorgan Chase shares are down 9.5% year to date and have fallen nearly 2% over the past 12 months.
The stock hasn't delivered the gains investors expected. The low interest rate environment has pressured the bank's ability to make money on loan balances and other banking fees.
With the stock around $59, there are many reasons to suspect that these shares will climb in the not too distant future.
Since Feb. 11, JPMorgan shares have rallied as much as 15%, from around $53 per share to $60.97 on March 18. On Feb. 11, the market learned that JPMorgan CEO Jamie Dimon had bought 500,000 shares of his company's stock, spending more than $26 million and creating the "Jamie Dimon bottom."
Insiders might sell shares of their company due to pre-planned tax events, to fund charities or to access salary paid in shares. But there's only one reason for them to buy: they believe the shares are going up.
In Dimon's case, he's already profited from his bet. And it's something we advised investors to do almost a month before Dimon bought his shares.
Not only has Dimon already made about 15% on his investment, he gets to collect a 44-cent per share quarterly dividend for an annual 2.9% yield. That's higher than the 2.1% average yield on stocks in the S&P 500undefined index.
Retail investors should now do the same and buy these shares, which have a consensus buy rating and an average analyst 12-month price target of $70. At the same time, investors can collect JPMorgan's strong dividend, which the company will pay on April 30 to shareholders of record on April 6.
Though the Fed may not raise interest rates to the extent the market expected in 2016, Fed Chair Janet Yellen's remarks on Tuesday suggest that a couple of rate hikes are still on the table. And that too bodes well for JPMorgan shares, which trade at huge discount.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.