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NEW YORK, Nov 19 (Reuters) - Stifel Financial Corp may revive the common stock dividend it eliminated more than a decade ago because it has enough cash to also keep expanding its retail brokerage and investment banking businesses, Chief Executive Ron Kruszewski said Wednesday.
At a conference sponsored by Keefe, Bruyette & Woods, an investment bank Stifel bought in 2013, Kruszewski said his St. Louis-based company has been cautious about restoring the dividend it stopped paying in 2002 because it does not want to send a message that it has no more growth potential through acquisitions and other business investments.
Stifel, which has acquired more than 10 banking and brokerage businesses since 2005, also plans to be more aggressive with pay packages to recruit retail brokers. “We can be more competitive in recruiting as an organization,” he said. “Our growth in the last two years has been muted.”
Stifel, which went public in 1986, previously paid a dividend of 3 cents a share to its common stockholders.
“We are considering a modest dividend because we generate so much cash,” Kruszewski said.
As of Sept. 30, Stifel had $535.2 million of cash and short-term investments on its balance sheet, or 5.9 percent of total assets.
The company has been intentionally cautious about increasing its balance sheet and borrowings in recent years because it wanted to build a strong capital cushion, Kruszewski said. It has not added assets to its $9.1 billion balance sheet for about a year but plans to grow to meet its target of a 15 percent return on equity at a time when its big bank competitors are rapidly reducing their ROE goals, Kruszewski said.
Stifel’s return on equity in the third quarter was 8.46 percent, versus 9.12 percent for all of 2013.
The executive said the firm’s recruiting of advisers for its profitable retail brokerage offices has been running at about half the average pace of its rivals. “We can be more come competitive in recruiting,” he said, noting that Stifel plans to include transition pay, upfront bonuses and other hiring lures as a more significant part of its capital allocation planning.
Shares of Stifel, up 6 percent in the past 12 months, fell 1 percent to $46.21 at mid-afternoon on the New York Stock Exchange.
Reporting by Jed Horowitz; Editing by James Dalgleish and Richard Chang