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5 Expensive Bank Stocks Still Worth Buying (Update 3)

4. U.S. Bancorp

Shares of U.S. Bancorp (USB - Get Report) of Minneapolis closed at $29.16 Monday, returning 8% year-to-date. Based on a quarterly payout of 12.5 cents, the shares have a dividend yield of 1.71%.

U.S. Bancorp reported fourth-quarter earnings of $1.35 billion, or 69 cents a share, improving from $1.27 billion, or 64 cents a share, during the third quarter, and $974 million, or 49 cents a share, during the fourth quarter of 2010. The company has been one of the strongest earnings performers among regional banks, with its ROA increasing from 1.37% in the fourth quarter of 2010 to 1.61% in the most recent quarter, according to HighlineFI.

The company's fourth-quarter net revenue increased 4% from the third quarter and 7% year-over-year, to $2.4 billion.

Please see TheStreet's detailed earnings coverage for much more on U.S. Bancorp's fourth-quarter results.

During the fourth quarter, the company repurchased 6 million shares under its 50 million share authorization.

CEO Richard Davis said on Jan. 18 that following the completion of the Federal Reserve's stress tests in March, U.S. Bancorp would look "forward to moving closer to our long-term goal of returning a majority of our earnings to shareholders in the form of dividends and buybacks."

Morgan Stanley analyst Betsy Graseck on Jan. 18 reiterated her "Overweight" rating for U.S. Bancorp, with a price target of $32, and said she expected the "quarterly dividend to increase +31% from 13c to 17c in 2012, total yield from 2.3% to 5.1%, and total payout ratio [including dividends and share buybacks] from 28% to 58%."

The shares trade for 2.7 times tangible book value and for 11 times the consensus 2012 EPS estimate of $2.68.

The shares rose 1% on Wednesday, to close at $29.63.

Interested in more on U.S. Bancorp? See TheStreet Ratings' report card for this stock.
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