Barclays Share Price Spikes on Higher Dividend Payouts Hopes

Summary:

In this Barclays share price forecast, we explain why the stock rose on higher dividend payout hopes as Wall Street banks boosted payouts

The Barclays share price rose by more than 2% as investors anticipated further shareholder returns. The BARCstock rose to a high of 175p in London. This means that the shares have jumped by more than 4% from the lowest level last week. Shares of other banks like Natwest and Lloyds also jumped.

What happened. Barclays is rising today as investors react to the recent announcements by some of the biggest banks in the US. In a statement yesterday, Morgan Stanley said that it will double its dividend to 70 cents from the previous 35 cents. The company also announced that it will increase the size of its share buybacks to $12 billion. This program will run to June 2022. The management said:

“Morgan Stanley has accumulated significant excess capital over the past several years and now has one of the largest capital buffers in the industry. Going forward we remain amply capitalized to drive further growth.”

In another note, Bank of America said that it will increase its dividend by 17%. Wells Fargo also doubled its dividend while Goldman Sachs boosted by 60%. Other banks like Citigroup and JP Morgan are also expected to announce dividend and share buyback increases. These announcement came after all banks managed to pass the Fed stress test.

As a result, analysts expect that Barclays and other banks in Europe will also boost their payments. Further, the Barclays share price is rising as investors react to the relatively strong UK house prices. This is beneficial to Barclays since it is a leading player in the UK mortgage industry.

Barclays share price forecast

In my last BARC share price forecast, I concluded that the stock would resume the downward trend after the BOE decision. This prediction did not happen as the stock has remained in a tight range. On the daily chart, we see that the shares found a substantial resistance at the 190p level. The stock is between the 50-day and 100-day exponential moving averages. It is also slightly above the 23.6% Fibonacci retracement level.

Therefore, in the near term, the shares will likely remain in the current range. A bullish breakout will be validated if it manages to move above the resistance at 180p. On the other hand, a bearish breakout will be validated if it manages to move below the important support at 165p.