Why Morgan Stanley (MS) Shouldn’t Pay Its Shareholders

If not now, when?
Once Morgan Stanley (NYSE:MS) has some more breathing room under stress test conditions, and has made substantial progress on purchasing the remainder of Smith Barney, it should request authorization to increase its dividend and/or share buybacks. The bank would be serving its shareholder’s long-term interests by putting off capital distributions in favor of the acquisition that places it firmly in the wealth management sphere — a direction Morgan Stanley is favoring.

But once Smith Barney is largely owned by Morgan Stanley, and integrated into the bank’s operations, its investors deserve a capital boost from the paltry level of distributions they receive now.

Morgan Stanley isn’t the only investment bank that got the short end of the Fed’s CCAR stick — but like MS, Goldman Sachs fared well regardless.

The article Why Morgan Stanley Shouldn’t Pay Its Shareholders originally appeared on Fool.com and is written by Jessica Alling.

Fool contributor Jessica Alling has no position in any stocks mentioned, but you can contact her here. The Motley Fool recommends Goldman Sachs. The Motley Fool owns shares of Bank of America, Citigroup, and JPMorgan Chase.

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