The following video is part of our "Motley Fool Conversations" series, in which senior analyst Anand Chokkavelu discusses topics across the investing world.

Citigroup was denied in the latest round of stress tests. Its projections passed the tests except for its capital allocation plan. In other words, its plan to increase dividends and/or repurchase shares needs to go back to the drawing board. Anand explains why he thinks that's a good thing and how far away Citi is from being stable enough to raise dividends.

Anand Chokkavelu, CFA, owns shares of Bank of America and Citigroup Inc. The Motley Fool owns shares of Bank of America and Citigroup Inc. 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.