Higher rates will benefit this bank

Article Excerpt

WELLS FARGO & CO. $39 remains a buy. The bank (New York symbol WFC; Conservative-Growth Payer Portfolio, Finance sector; Shares outstanding: 3.8 billion; Market cap: $148.2 billion; Dividend yield: 2.6%; Dividend Sustainability Rating: Average; www.wellsfargo.com) is third-largest banking firm in the U.S., with total assets of $1.94 trillion. Due to the COVID-19 pandemic, Wells Fargo cut its quarterly dividend by 80.4% to $0.10 a share with the September 2020 payment. However, now that the economy is re-opening, it doubled the quarterly dividend to $0.20 in September 2021, and raised the payment a further 25.0% to $0.25 a share in March 2022. The new annual rate of $1.00 yields 2.6%. The bank expects rising interest rates will cut its mortgage banking income by 50% in the second quarter of 2022 compared to the first quarter. However, it will earn higher income on credit cards and other loans. In fact, its net interest income (interest income from loans less payments to depositors) will probably rise 15% this year…

You are trying to access subscriber-only content.

To read this article, you may subscribe or sign in.
If you are already a subscriber, log in here.

If you wish to become a subscriber, click here. Or you may enjoy access to all our publications when you become a Member of Pat McKeough's Inner Circle Pro.