Bread Financial hikes dividend 10% as credit profile strengthens
Credit rating upgrades and capital improvements support shareholder returns amid mixed earnings expectations
Bread Financial Holdings raised its quarterly dividend by 10% to $0.23 per share, signaling growing confidence in the consumer finance company's capital position and credit profile, even as analysts projected a modest earnings decline for the fourth quarter.
The board announced the dividend increase for the first quarter of 2026, payable March 16 to shareholders of record as of February 27. The increase from the previous $0.21 quarterly dividend represents an annualized payout of $0.92 per share, yielding approximately 1.2% at current price levels.
The dividend hike follows significant credit rating upgrades during 2025 that reflect the company's strengthened capital and funding profiles. Moody's upgraded Bread Financial's long-term issuer rating to Ba2 with a positive outlook in October, while Fitch also improved its outlook to positive following the company's fourth-quarter 2024 results.
Shares of Bread Financial were trading at $68.20 on Wednesday, down 1.8% from the previous session, giving the Columbus, Ohio-based company a market capitalization of approximately $3.2 billion. The stock has traded in a 52-week range of $37.78 to $82.03.
Analysts anticipate Bread Financial to report fourth-quarter revenue of approximately $949 million, representing modest year-over-year growth of about 2.5%. However, earnings per share are projected to decline 7.3% to $0.38 per share compared with the same period a year earlier, according to consensus estimates.
The company's tangible book value per share stood at $56.39 as of the third quarter of 2025, reflecting significant improvement from $46.97 in the fourth quarter of 2024, based on the latest available public data.
Bread Financial, which provides lending and payment technology solutions primarily for consumer sectors in North America, has been executing a strategic transformation focused on digital platforms and customer-centric approaches. The company's trailing twelve-month revenue totaled $2.51 billion, with a profit margin of 18.8%.
Analysts have mixed ratings on the stock, with four recommending buy, seven suggesting hold, and two advocating sell. The consensus target price stands at $80.07, representing potential upside of approximately 17% from current levels.
The credit rating upgrades during 2025 have enhanced Bread Financial's borrowing costs and access to capital markets, positioning the company for improved funding flexibility as it navigates a challenging consumer credit environment. The positive outlook from both Moody's and Fitch suggests potential for further ratings improvements.
Bread Financial's focus on digital transformation and cost discipline has supported improving operating margins, which reached 29.6% over the trailing twelve months. The company trades at a price-to-book ratio of 0.96, suggesting the market values it near its tangible book value.
Investors will be watching for management's commentary on 2026 guidance, particularly regarding loan growth expectations and credit quality trends, when the company reports its fourth-quarter and full-year 2025 results on January 29, 2026. The conference call is scheduled for 8:30 AM ET on the same day.
The dividend increase underscores management's confidence in generating sufficient capital to support shareholder returns while maintaining appropriate leverage ratios, even as the company invests in growth initiatives and navigates evolving consumer credit conditions.