3 Reasons to Hold On to This Megabank's Stock

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.

Summary:

  • 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.


Read/Post Comments (2) | Recommend This Article (4)

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  • Report this Comment On May 21, 2014, at 5:35 PM, ozatalar2 wrote:

    If the dividend paying stocks are the king of the jungle, why are people buying the BRK shares which never pays dividend.?

    You should consult with Warren Buffet as to his company pays no dividend , yet everyone swarms to it.

    Have a good day, GIL

  • Report this Comment On May 26, 2014, at 2:12 PM, TMFBigFrog wrote:

    Hi GIL,

    If you look not at Buffett's company, but the companies he invests in, you'll find that many of them are of the dividend paying (and dividend-increasing) variety. Indeed, last December, Buffett's company bought out an energy company that the iPIG portfolio held. See this article for details: http://www.fool.com/investing/dividends-income/2013/12/24/ho... .

    -Chuck

    Inside Value Home Fool

    Disclosure: I own shares of Wells Fargo

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