Morgan Stanley doubles dividend after passing Fed ‘stress test’: time to buy?

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on Jun 28, 2021
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  • The Federal Reserve released the results for banks’ stress test amid the pandemic.
  • Morgan Stanley said it would double its quarterly dividend after passing the stress test.
  • MS shares spiked more than 3% in the after-hours trading.

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Morgan Stanley (NYSE:MS) stock spiked more than 3% in the after-hours trading on Monday after the Federal Reserve released stress test results. The company said it would double its quarterly dividend from $0.35 per share to $0.70 after making the list of big banks that passed the stress test.

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What is the Fed stress test, and is MS a buy?

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The Fed stress test is an assessment conducted to evaluate the US biggest banks’ ability to support the economy during economic crises. The Federal Reserve assesses the banks’ revenues, losses, and capital levels.

MS was one of the banks to pass the test based on results released on Monday. The doubling of its quarterly dividend will attract more investors. The stock trades at an attractive P/E ratio of 11.51. The valuation could improve given this year’s expected earnings growth of 24.60%.

Source – TradingView

Technical overview: trendline support remains resilience 

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The trendline support remains solid in the daily chart. The 100-day moving average also provides strong support. Investors can target profits at approximately $91.74. The support level is $83.91. The upward momentum seems poised to continue after Monday’s spike.

Bottom line: MS looks like an exciting buy

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In summary, Morgan Stanley shares trade at an attractive P/E ratio. The stock seems to have strong upward momentum after Monday’s spike. Now could be an excellent time to buy.

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Finance & Banking North America Stock Market