3 Reasons to Hold On to This Megabank's Stock

It has a reasonable valuation, a healthy balance sheet, and a solid, well-covered, and growing dividend.

May 20, 2014 at 7:33PM

Wells Fargo (NYSE:WFC) is a selection for the real-money Inflation-Protected Income Growth portfolio. In this brief video, portfolio manager Chuck Saletta offers three reasons he's holding on to the megabank's stock despite its 20% increase since he bought the shares in May 2013. Chuck also compares Wells Fargo's progress since the financial crisis to Bank of America (NYSE:BAC) and Citigroup (NYSE:C) to showcase what makes Wells Fargo such a rock-solid bank.

Is Wells Fargo a dividend stock for the next decade?
Wells Fargo made the cut for this portfolio in large part because it was so quick at recovering its dividend after the financial crisis. Dividends matter, and the smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby.

Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.


  • Wells Fargo's dividend has increased to $0.35 per share -- beyond where it was at the start of the financial crisis -- and is still well covered, with room to continue growing. Contrast that with Bank of America and Citigroup, whose dividends are still at the $0.01 per share they fell to during the crisis.
  • Wells Fargo was able to increase its dividend faster than Bank of America and Citigroup because Wells Fargo has a solid balance sheet and a strong capital structure. As a result, Wells Fargo received Federal Reserve permission to restore its dividend far faster than those other megabanks.
  • Wells Fargo still looks reasonably priced, with a market cap in line with the iPIG portfolio's fair-value estimate.

To follow the iPIG portfolio as buy and sell decisions are made, watch Chuck's article feed by clicking here. To join The Motley Fool's free discussion board dedicated to the iPIG portfolio, click here. To see the iPIG portfolio's online tracking spreadsheet, click here.

Chuck Saletta owns shares of Wells Fargo and has an open options position in Bank of America. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, and Wells Fargo and has the following options: short June 2014 $50 calls on Wells Fargo and short June 2014 $48 puts on Wells Fargo.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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