Stifel shares climb on 3-for-2 stock split, 11% dividend hike
Ninth consecutive annual dividend increase signals confidence as wealth management firm strengthens shareholder returns
Stifel Financial Corporation shares rose in late trading Tuesday after the St. Louis-based investment bank announced a three-for-two stock split alongside an 11% increase to its common stock dividend, marking the company's ninth consecutive annual dividend increase.
The firm declared a 50% stock dividend payable February 26 to shareholders of record February 12, effectively implementing the three-for-two split. Stifel simultaneously increased its quarterly common stock dividend to $0.51 per share from $0.46, which will adjust to $0.34 per share post-split.
The combined moves underscore Stifel's confidence in its growth trajectory as the wealth management and investment banking firm continues expanding through both organic growth and strategic acquisitions. The company, with a market capitalization of approximately $13.1 billion, has seen its shares climb 75% over the past year, outperforming both the S&P 500 and broader financial sector indices.
Stifel's financial performance has strengthened markedly, with quarterly earnings growth reaching 37.3% year-over-year and revenue expanding 16.5% in the most recent period. The firm trades at a price-to-earnings ratio of 22.71 times trailing earnings, slightly above industry averages but reflecting investor confidence in its mid-sized model that combines institutional trading with retail wealth management.
"The ninth consecutive annual dividend increase demonstrates our commitment to delivering attractive returns to shareholders while maintaining the financial flexibility to pursue growth opportunities," the company said in its announcement. Stifel also declared a cash dividend on its preferred stock, continuing its dual approach to shareholder returns.
The stock split, Stifel's first since 2021, will increase the number of shares outstanding from approximately 101.8 million to roughly 152.7 million. While splits do not change fundamental value, they often signal management's confidence that higher share prices will not impede retail investor participation. With Stifel trading near its 52-week high of $134.74 before today's modest decline to $126.34, the split aims to enhance liquidity and accessibility.
Analyst sentiment remains constructive on Stifel, with four analysts rating the stock a buy or strong buy and four recommending hold. The consensus price target of $139.75 suggests roughly 11% upside from current levels, though targets vary significantly given the cyclical nature of capital markets businesses.
Institutional investors own 89.4% of Stifel's outstanding shares, reflecting its status as a established mid-cap financial services player. The company's dividend yield stands at approximately 1.38% pre-split, a relatively modest figure typical of growth-oriented financial firms that prioritize reinvestment and acquisition-driven expansion over high yield.
The wealth management sector has faced headwinds from market volatility and competitive pressure from robo-advisors, but Stifel's diversified model spanning institutional equities trading, fixed income, investment banking, and retail brokerage has provided resilience. The firm has completed several strategic acquisitions in recent years, expanding its footprint in specific regional markets and specialized niches.
Stifel's return on equity of 11.7% and profit margin of 12.5% place it in the middle tier of capital markets firms, suggesting room for operational improvement. However, its consistent dividend growth through nine years demonstrates disciplined capital allocation even during periods of market stress.
The company's next significant catalyst will be its fourth-quarter earnings report, expected in February, which will provide insight into how market conditions in late 2025 impacted trading revenues and wealth management asset flows. Analysts will be watching for commentary on the integration of recent acquisitions and management's outlook for 2026 market activity.
Investors considering Stifel should weigh the benefits of its diversified business model and consistent dividend growth against the cyclical risks inherent in capital markets operations. The stock split and dividend increase signal management's confidence, but the company's fortunes remain tied to overall market volatility, IPO activity, and the willingness of retail and institutional investors to engage in trading activities.