State Street plans 11% dividend hike after passing Fed stress test

BOSTON - State Street Corporation (NYSE:STT) announced Tuesday its intention to increase its quarterly common stock dividend by 11% to $0.84 in the third quarter of 2025, subject to board approval. According to InvestingPro data, the company has maintained dividend payments for 55 consecutive years, with a current yield of 2.88%.

The financial services company also reported it had completed the Federal Reserve’s 2025 Supervisory Stress Test process. State Street’s calculated Stress Capital Buffer (SCB) was below the 2.5% minimum, resulting in a preliminary continued SCB at that floor, maintaining its common equity tier 1 (CET1) ratio requirement at 8%. The company’s strong financial position is reflected in its market performance, with InvestingPro showing a 48.21% total return over the past year.

The Federal Reserve will release the firm’s final SCB requirement by August 31, 2025, which will become effective on October 1, 2025, and remain in effect through September 30, 2026.

"The results of the Federal Reserve’s stress test reaffirm State Street’s robust financial strength and our ability to support clients through a range of severely adverse economic conditions," said Chairman and Chief Executive Officer Ron O’Hanley in the press release.

State Street’s Board of Directors will consider the common stock dividend at a regularly scheduled board meeting in the third quarter of 2025. The company continues to be authorized to repurchase common shares under its existing share repurchase program previously approved by its Board of Directors.

As of March 31, 2025, State Street reported $46.7 trillion in assets under custody and/or administration and $4.7 trillion in assets under management, operating in more than 100 geographic markets with approximately 53,000 employees worldwide. With a market capitalization of $30.54 billion and trading at a P/E ratio of 11.82, InvestingPro analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report.

In other recent news, State Street Corporation has announced several significant developments that may interest investors. The company, in collaboration with UC Investments, is launching a digital investing platform aimed at providing individual investors with access to institutional-grade investment tools. This initiative will initially target participants in UC’s defined contribution plan and may expand to a broader audience. In terms of analyst evaluations, CFRA has downgraded State Street’s stock rating from "Buy" to "Hold," adjusting the price target to $105 due to perceived limited upside potential. Conversely, Truist Securities has upgraded State Street from "Hold" to "Buy," raising the price target to $112, citing the company’s favorable position in the equity markets and foreign exchange activities.

Additionally, State Street has appointed Sara Mathew as the new independent Lead Director of its Board, succeeding Dame Amelia Fawcett. Mathew’s extensive experience in corporate finance and strategy is expected to be an asset in her new role. Furthermore, State Street Global Advisors has engaged in discussions with Carlyle Group regarding a potential joint venture to merge public and private markets for individual investors. This potential partnership could enhance access to retail wealth in the private-capital sector. These developments reflect State Street’s ongoing strategic initiatives and adjustments within its leadership and market positioning.

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