Dividends for Financials are expected to rise by 26% in 2011 and 24% in 2012. Even with 25% growth, Financials will pay 12% of all dividends in 2012, far below their peak share of 30% in 2007.

We recommend investors searching for higher yield buy our dividend growth basket. Falling bond yields make high-yielding equities appear more attractive on a risk-adjusted basis. We believe companies returning cash to shareholders through current dividends and strong dividend growth will outperform in such an environment.

Eoin Treacy's view
Big Banks First in Dividend Line - This article by Laurie Kulikowski for TheStreet.com and this article from the Wall Street Journal quoting Goldman Sachs highlights an important potential change in attitudes towards some of the better performing US banks. Here is a section from the latter:

Dividends for Financials are expected to rise by 26% in 2011 and 24% in 2012. Even with 25% growth, Financials will pay 12% of all dividends in 2012, far below their peak share of 30% in 2007.

We recommend investors searching for higher yield buy our dividend growth basket. Falling bond yields make high-yielding equities appear more attractive on a risk-adjusted basis. We believe companies returning cash to shareholders through current dividends and strong dividend growth will outperform in such an environment.

My view - Only a few short weeks ago, the primary sentiment associated with the US financial sector was anxiety over the possible knock-on effects of the mortgage documentation scandal. Now, investors are beginning to look at the sector from a fresh perspective because of the potential for dividend growth. The timing of the Fed's announcement, that banks which have returned TARP funds may be allowed to pay a dividend, suggests that the central bank is targeting the stock market in its effort to further stimulate the economy.

JP Morgan which was in need of an upward dynamic to signal a return of investor interest received it last week. A sustained move below $37.50 would now be required to question medium-term upside potential.

Wells Fargo rallied back above the 200d-ay MA last week and a sustained above $30 would indicate a return to medium-term demand dominance.

US Bancorp successfully pushed back above $25 last week and a sustained move back below the 200-day MA, currently near $23.50 would be required to question medium-term upside potential. PNC Financial has a relatively similar pattern.