Bank Investors Will Bask in a Champagne Glow This Week

Bank of America, JPMorgan Chase, and Wells Fargo are still a little happy drunk after celebrating their respective approvals in the Fed's CCAR last Wednesday, and one is even handing out a dividend while it rides out the hangover. Sober Citigroup, however, wasn't invited to the party.

Mar 31, 2014 at 1:57PM

Over the next few days, Bank of America (NYSE:BAC)JPMorgan Chase (NYSE:JPM), and Wells Fargo (NYSE:WFC) investors will engage in a lot of water-cooler talk about dividends and buybacks. This is the first full week after the comprehensive capital analysis and review, or CCAR, the component of the Federal Reserve's bank stress tests that included the Fef's yays or nays for the capital allocation plans of the nation's big lenders. All in all, financials did very well this year, with 25 of the 30 tested companies getting the green light for their proposals.

Shareholders of Bank of America, JPMorgan Chase, and Wells Fargo will happily chatter about their banks' bumped-up dividends and share repurchase programs. Prior to the CCAR, Wells Fargo distributed a dividend of $0.30 per share on March 1. For its next distribution, this will now rise to $0.35 per share.

Not every bank is as fortunate. Citigroup (NYSE:C). was among the five banks to see its capital plan rejected in the CCAR. The big incumbent's shareholders remain stuck with a $0.01 per share dividend, which it has been paying every quarter for over five years now. Like Bank of America, Citigroup had requested a boost to $0.05 per share (in addition to a $6.4 billion share buyback initiative), but the regulator vigorously shook its head at the scheme.

This week, investors in financial majors will not only be keeping an eye on developments in the domestic market. The European Central Bank will hand down a decision on its benchmark main refinancing rate on Thursday. It is widely expected to keep the current level of 0.25%, as the continent's recovery has been slow and Euro-business needs the juice a low number can provide. 

Whatever the decision, it will have some impact on financials with a big presence in Europe. Among the four American biggies, this means Bank of America (in the form of its powerhouse investment banking subsidiary, Merrill Lynch), JPMorgan Chase, and Citigroup. All three stand to benefit from a recovery in the European economy, but we shouldn't expect that for a while no matter what the ECB does.

The American macro economy, meanwhile, will be in focus as several key figures are released over the next few days. Arguably the most critical is the March unemployment rate, to be published Friday morning by the Bureau of Labor Statistics. The consensus is for a slight drop, to 6.6% from February's 6.7%, due in no small part to the thaw in the weather. Other notable macro numbers coming down the pipe this week include the Census Bureau's figure for construction spending in February, to be published on Tuesday, and the February trade deficit figure from the Commerce Department, to be released Thursday.

For the most part, though, this week should be all about the micro economy, particularly as it concerns the operations of the nation's financials. Last week was a good one for banks; they'll hope the same for this Monday to Friday period, too. 

Big banking's little $20.8 trillion secret
Do you hate your bank? If you're like most Americans, chances are good that you answered yes to that question. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. To learn about about this company, click here to access our new special free report.

Editor's note: a previous version of this article stated that Wells Fargo distributed its dividend this week. This dividend was actually paid on March 1. The Fool regrets this error.

Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Wells Fargo, and owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers