Shares of Wells Fargo Surge as Company Announces $30 Billion Buyback Program

Wells Fargo experienced a surge in shares on Tuesday following the bank’s announcement to repurchase $30 billion worth of stocks.

The company further disclosed that its board of directors has approved a previously announced dividend increase, raising it from 30 cents per share to 35 cents. This dividend will be paid to shareholders of record on August 4, with the payment scheduled for September 1.

In extended trading on Tuesday, Wells Fargo’s stock witnessed a more than 3% increase.

These developments come in the wake of the bank surpassing second-quarter earnings and revenue expectations, primarily driven by a significant 29% surge in net interest income. The series of interest rate hikes by the Federal Reserve over the past year has proven beneficial for major financial institutions, even though borrowers have faced higher interest burdens.

It is widely anticipated that the central bank will raise rates again on Wednesday in an effort to combat rising inflation.

In response to the stock buyback practices of large corporations, Democratic lawmakers have introduced several bills aiming to restrict such activities. They argue that these companies are prioritizing wealthier shareholders over increasing employee wages.

After successfully clearing the Federal Reserve’s annual stress test last month, the largest U.S. banks have announced plans to raise their quarterly dividends.

“Despite these substantial investments, our capital levels remain robust and we expect them to continue as such, allowing us to distribute excess capital to our shareholders,” stated Wells Fargo CEO Charlie Scharf in conjunction with the bank’s announcement.