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Earlier this morning, BB&T (NYSE: BBT) announced that it will cut the size of its dividend as part of its plan to repay all stock and warrants that were invested in the company through TARP. BBT said that a 15-cent dividend will be paid on common stock in the third quarter -- 68% lower than the company's current 47-cent dividend. BBT declare: "In addition to our current earnings, while superior to our peers, are not likely to justify our 47-cent dividend in the near term." The company said that the board decided to make the dividend cut thanks to "the risk and uncertainty associated with being a TARP participant." This reduced dividend will be paid on August 3 to shareholders of record as of July 10.
BBT also announced that it has started a public offering of $1.5 billion of its common stock for sale to the public. The proceeds BBT accumulates will be used as tangible common equity and Tier 1 regulatory capital.
Technically, BBT faces overhead resistance from its descending 20-month moving average. The stock managed to top this trendline in late 2008 - but the stock dropped since. Yes, BBT has rebounded, but the overhead resistance may be more than the stock can handle. Will the bank be able to weather the current economic storm and help lead the economy higher? There are some who believe financial firms will lead the market higher when the recovery starts. I can't say that I am one of them, but there is an intermediate-term sign that BBT may be recovering.
BBT's 10-week moving average is on the cusp of a bullish cross of its 20-week counterpart. This move is often considered a bullish indicator, and completion of this cross could be a good sign.
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