JPMorgan Chase & Co. (JPM) Is A Compelling Long-Term Investment

When you’re talking about dividend paying companies (and specifically dividend growth), you’re likely to think about the normal host of characters – The Coca-Cola Co’s (NYSE:KO), Johnson & Johnson’s (NYSE:JNJ) and Procter & Gamble Co’s (NYSE:PG) of the world.

You think about large firms that have not only paid but also increased their dividends for years. And then the other companies – the smaller firms or those that have much shorter dividend increase streaks – are easy to forget.

To be frank this could be a perfectly reasonable focus for the dividend investor. If you only concentrate on companies that have increased their payouts for decades, you stand a solid chance of narrowing down your focus to only the highest quality businesses. This tactic doesn’t guarantee success, but it certainly leads you in the right direction.

Yet I would contend that there are often other areas of interest – outside of the typical Dividend Aristocrats or Dividend Kings – that can be equally as compelling.

The firm that I would like to talk about for this article is JPMorgan Chase & Co. (NYSE:JPM).


Source: JPMorgan Investor Relations

Among smart money investors tracked by Insider Monkey, the sentiment towards JPMorgan remained flat as 100 funds reported long positions as of the end of 2015. These investors amassed $7.58 billion worth of stock or roughly 3.10% of the outstanding shares. Alex Snow’s Lansdowne Partners and billionaire Ken Fisher’s Fisher Asset Management reported holding 20.16 million shares and 13.99 million shares of JPMorgan, respectively, in their last 13F filings.

JPMorgan had a long and impressive dividend increase streak for quite some time…

Then the financial crisis came, and what was once a $0.38 quarterly dividend was slashed to just $0.05. For an income investor relying on the cash dividends from this security, that’s not going to be good news. And from this fact alone, it’s easy to write this security off.

However, I would like to make a few points before getting to today’s situation.

First, the dividend was effectively “forced” to be cut. This doesn’t give much solace to the retiree living off dividends, but it is nonetheless interesting to note that JPMorgan had the ability to keep making its payment but the company faced regulators.

Next, often times of distress actually tend to be quite good periods for investment.

And finally, the previous mark has now been restored and is actually higher as the quarterly dividend sits at $0.44.

So let’s keep an open mind and think a bit about the future.

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