Wells Fargo to Split Stock, Boost Dividend

Wells Fargo & Co. said Tuesday that it would split its stock for the first time since 1998, boost its cash dividend and buy back an additional 25 million shares.

The two-for-one stock split will be effective Aug. 11, San Francisco-based Wells Fargo said. The buyback represents about 1.5% of shares outstanding.

Banks are turning to share buybacks in an effort to get a better return for shareholders as rising short-term interest rates diminish income from mortgages and other loans.

Wells Fargo shares have gained 3.7% this year and trade at about 13 times estimated 2006 earnings per share, a relatively high ratio among bank stocks.

The quarterly dividend will climb nearly 8%, to 56 cents a share, from 52 cents on a pre-split basis and will be paid Sept. 1. to shareholders of record as of Aug. 4, Wells Fargo said.

The company’s stock fell 71 cents to $65.14 on Tuesday before the announcements. The price rose to $65.50 after hours.