This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Wells Fargo: Financial Winner

An important concern for investors if the "Bush tax cuts" expire, is the end of the 15% federal income tax rate limitation on qualified dividend income, which includes most dividends on common and preferred stock. Under the current rules, if an investor's adjusted gross income keeps him or her under in the 15% tax bracket, the investor actually pays no federal taxes on the dividend income, so nearly all investors could see a massive new haircut to their dividend income.

Many companies are acting accordingly, by moving up quarterly dividend payments or making special dividend payments before the end of the year. For example, City National Corp. (CYN - Get Report) of Los Angeles on Nov. 15 announced that it would move its regular 25-cent quarterly dividend for the fourth quarter, that would be normally be paid in January, to Dec. 18. The bank holding company also announced a special 25-cent special dividend, payable on the same day.

City National closed at $48.59 Thursday, returning 12% year-to-date. The shares trade for 1.1 times tangible book value, according to Thomson Reuters Bank Insight, and for 12 times the consensus 2013 earnings estimate of $3.94 a share, among analysts polled by Thomson Reuters. Based on the regular quarterly payout, the shares have a dividend yield of 2.06%.

Jefferies analyst Ken Usdin on Thursday said that the "housing recovery still has legs," but added that "housing becomes more intertwined with politics in coming weeks given increased chatter that those earning over $250k per year could see limitations on mortgage interest tax deductions."

Wells Fargo's Return of Capital.


Wells Fargo's shares have now returned 24% year-to-date, following a 10% decline during 2011.

The shares trade for 1.6 times tangible book value, according to Thomson Reuters Bank Insight, and for nine times the consensus 2013 EPS estimate of $3.63. The consensus 2014 EPS estimate is $3.94. Based on a quarterly payout of 22 cents, the shares have a dividend yield of 2.65%.

Wells Fargo trades much higher to tangible book value than most other large-cap bank stocks in the current environment, reflecting its strong and consistent earnings performance. Over the past five quarters, the company's operating returns on average assets have ranged between 1.27% and 1.46%, and its returns on average tangible common equity have ranged between 15.59% and 16.85%, according to Thomson Reuters Bank Insight.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
CYN $92.76 0.51%
WFC $56.07 0.74%
AAPL $132.04 1.87%
FB $80.55 1.50%
GOOG $539.80 1.40%

Markets

DOW 18,162.99 +121.45 0.67%
S&P 500 2,123.48 +19.28 0.92%
NASDAQ 5,106.5930 +73.8420 1.47%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs