Federal Reserve Approves Huge Increase in Capital One Financial Corp. (COF)’s Dividend: BB&T Corporation (BBT), SunTrust Banks, Inc. (STI)

While this base eroded by 330 basis points to 7.4% after the Fed’s apocalyptic economic assumptions were factored into the equation, and a further 70 basis points once the now-approved dividend increase was included, the resulting 6.7% was still comfortably in excess of the 5% regulatory minimum. This is particularly impressive when you consider the size of Capital One Financial Corp. (NYSE:COF)’s credit card portfolio — which by their nature are typically riskier than other types of loan holdings.

Following this news, shares of the McLean, Virginia-based bank are trading up by nearly 1%, outperforming the likes of Fifth Third, SunTrust Banks, Inc. (NYSE:STI), and PNC Financial. For the year, however, the lender has struggled, watching as its shares have fallen by nearly 11%. While much of this can be attributed to its run-up over the last two years, there’s a growing sense of discontent with its method of growth. That is, as opposed to using organic avenues, Capital One Financial Corp. (NYSE:COF) has sought to grow quickly through acquisitions.

Last year, for example, Capital One closed on two giant deals. In February, it paid $9 billion to acquire the online banking pioneer ING Direct. And in May, it purchased HSBC Holdings plc (ADR) (NYSE:HBC)‘s $28 billion U.S. credit card operations. How these ultimately shake out will in large part dictate the performance of Capital One’s share price going forward.

The article Federal Reserve Approves Huge Increase in Capital One’s Dividend originally appeared on Fool.com and is written by John Maxfield.

John Maxfield has no position in any stocks mentioned. The Motley Fool owns shares of Fifth Third Bancorp and PNC Financial Services (NYSE:PNC).

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