Me personally despises banks and would not invest in them directly. They all do questionable things at times, but WFC has been one of the more unethical ones time and time again, as many of us know by their various lawsuits and settlements. I don't trust WFC farther than I could throw them ... and the rest of the banking world ain't far behind them in my level of trust as an investment. They may pay nice divs but I still don't trust them or their accounting practices.
If i wanted a financial stock of some sort, I'd look at some of the better investment managers - TROW, LAZ - than a bank.
Toadfish - If your looking for cap gains over time look at MA or V. For varying dividends an index or ETF as suggested plus look at a more risky CEF for even higher varying dividends. Invest in financials on the fringes also as suggested rather then individual bank stocks which are subject to greater government regulation. You never need another risk factor while investing unless there’s a greater reward (not based on hope or what you think) for your investment. Consider the plight of the banking industry this century so far.
I started a small position fairly recently based on cheapness, the good CCAR results and capital return plans (13.3% planned increase in the dividend to $.51/quarter at current price would yield 4.5%; over 10% of market cap to be bought back over the next year at cheap prices).
On the earnings call it sounded like their risk management and compliance costs will stay elevated the rest of 2019 and 2020, instead of declining as apparently the market expected. They still need to find a permanent CEO. Hopefully one with integrity and banking sense can be found.
My bet is they won't go out of business and they will eventually get the ship righted. Banks are now highly regulated and safer than they've been in decades. Even given that, they trade at half the P/E of most regulated utilities. It may take a while, but surely there is some value here.
Another part of my rationale was reducing my overweight in expensive stocks that benefit from lower interest rates: utilities, property REITs, and staples. If we ever get strong economic growth and WFC loses their asset cap and gets their compliance expenses behind them, it should benefit. So I consider it a hedge against my defensive high yielders.
A new CEO and getting the asset cap lifted will likely unlock a fair amount of appreciation. The bank's focus on the American general public (vs. other large banks) is appealing - especially considering the good shape most American consumers are in. To point an example, WFC had a nice uptick in auto origination in 2Q, up 43%.
WFC divs. You decide how you wa
For 15 years I banked with WFC. Few years back I totally moved to different banks. I can see that WFC service and technology is very inferior. I am not sure new CEO can turnaround things. Turnarounds are hard.
What do value investors on this forum think of this value opportunity?
I bought some WFC a couple weeks ago when it was under $24.00. But I have had my account there for so long, and really dislike them. I woke up the next morning feeling sick that I actually owned WFC and sold it all.
During my buying frenzy in March - Apr I bought a few shares of WFC here and there. I decided that if I was going to own a bank stock I would rather buy JPM. Plus, I'm a bit concerned about their dividend, and the amount they were setting aside for loan loss reserves. Overall, I was not sleeping well with this in my portfolio, so I sold, ended up with a loss of around $120. Might turn out to be a bad move financially, but I am sleeping better, and didn't even have to order a My Pillow from Mike Lindell...
I would add some more JPM and WFC at a low low price. If buying for dividend would figure on a 50% cut down the road, but guess they will raise it back as soon as they can.