Not long ago, the Federal Reserve completed its stress tests on the country’s largest banks, with many firms announcing large dividend increases afterward. The Fed’s stress tests look at how capable these large financial institutions are of weathering a recession. The tests were a reaction to the Great Financial Crisis, which made it clear that bank failures could have systemic negative effects on the overall economy.
The Fed’s 2026 stress tests analyzed the effects that a severe hypothetical recession would have on 32 banks. All 32 passed the test, showing that their assets would be sufficient to cover loan losses in a severe recession. On this basis, several banks went ahead with dividend increases, as they had extra capital to distribute to shareholders.
The common equity tier 1 capital ratio (CET1) is the key metric tested. The ratio needs to stay above a minimum requirement of 4.5% to pass the test. In doing so, the bank shows it has the capital required to absorb large loan losses.
After passing the tests, these three banking giants plan to add juice to their dividends.
Goldman Plans to Continue Strong Dividend Growth
First up is The Goldman Sachs Group (NYSE: GS). During the forecast period, Goldman’s CET1 ratio started at 14.3% and dropped as low as 11.4%, easily passing the 4.5% bar.
In response, the company said it “intends" to increase its common dividend from $4.50 to $5 per share. It says "intends" because the increase isn't formal until approved at the Board of Directors' next meeting—but with stress test results already in hand, that approval is largely a formality. Since the dividend isn't yet official, the record and payment dates are still unknown.
Currently, Goldman’s yield sits near 1.8%. After the planned increase, the stock’s indicated yield would move up to around 2%. Excluding this planned increase, Goldman has grown its dividend by a very strong 22.87% annually during the past five years.
Overall, Goldman has demonstrated its ability to hold up during a recession while also offering a solid and rapidly growing dividend to investors.
Wells Fargo Plans Over 10% Dividend Increase Upon Passing Fed’s Test
Wells Fargo & Company (NYSE: WFC) also demonstrated its ability to withstand a severe economic downturn during the Fed’s stress tests. During the test, the firm’s CET1 ratio started at 10.6% and dropped to 9.2%, staying well above the required hurdle.
Similar to Goldman, Wells Fargo announced that it “expects” to increase its dividend. During Q3 2026, the company plans to boost its dividend from 45 cents to 50 cents per share, or an 11% increase.
Currently, Wells Fargo’s indicated yield is approximately 2.15%. After the expected increase, that figure would move up significantly to just below 2.4%.
Excluding this planned increase, its five-year annualized dividend growth rate is 6.86%. This figure is somewhat underwhelming, given the firm's significant 2020 dividend cut to 10 cents. Since then, however, its dividend has increased dramatically.
According to the Fed’s testing, Wells Fargo is in a solid position to weather the worst of a recession. Meanwhile, the company offers a meaningful dividend yield, combined with recovering dividend growth.
Citigroup Plans Sizeable Dividend Increase, Yield to Approach 2%
Last up is Citigroup (NYSE: C). The company began the stress test period with a CET1 ratio of 13.2%. During the test, its ratio fell to 10.3%, solidly surpassing the 4.5% minimum. Now, Citigroup plans to increase its dividend by 12% from 60 cents per share to 67 cents per share.
Currently, the firm has an annualized dividend of $2.40, equating to a yield of just under 1.7%. The company’s planned dividend increase would bring the figure to just under 1.9%.
Notably, Citi has grown its dividend at a very slow rate over recent years. The company’s five-year dividend growth rate is only 2.61%, excluding this planned increase. This comes as during an over four-year period from 2019 to 2023, Citi did not increase its dividend at all. However, Citi has been turning around its business, with the firm posting record revenues across all of its five main divisions in 2025.
This has allowed the company to get back to dividend increases more recently.
Citi’s strong performance during the Fed's stress test demonstrates a level of financial resilience, giving it the ability to continue returning significant capital.
Analysts Forecast Gains in Wells Fargo After Meager Performance
Overall, Goldman, Wells Fargo, and Citigroup all easily passed the Fed’s stress test, staying well above the minimum requirement. Aside from capital returns, Wall Street analysts are forecasting the most upside in Wells Fargo among this group. The MarketBeat consensus price target on Wells Fargo sits near $98, implying gains of more than 15%.
This comes partially because Wells Fargo has underperformed, while Goldman and Citigroup have already gone on strong runs. Since the beginning of 2025, Citigroup is up more than 100%, Goldman is up more than 75%, and Wells Fargo’s return is less than 30%.