Two investors look at the same jagged line and see two entirely different stories – fear for one, quiet opportunity for the other. Western Union‘s (NYSE: WU) chart is one of those Rorschach tests.

The stock crested near $12 in early 2024, faded through the rest of the year, and spent most of 2025 trying to decide whether it still belongs in a faster-moving world.

Yet beneath that messy picture is a company changing in ways the market hasn’t fully caught on to. That tension – the reputation of a fading legacy player versus the reality of a business adapting more quickly than it gets credit for – is what pulled me into Western Union this week.

Western Union is still best known for its global remittance network, the financial lifeline for millions of families spread across borders. But the company is steadily reshaping itself.

Management’s “Evolve 2025” strategy leans on something simple but smart: using the company’s enormous retail footprint to funnel customers into better digital experiences while building new services that make Western Union more than a one-trick money transfer company.

It’s slow, steady modernization rather than a flashy reinvention.

The numbers from the third quarter show both the friction and the progress. Revenue landed at just over $1 billion, basically flat from last year. Adjusted revenue dipped slightly, and North America retail continues to slide as customers shift to mobile and low-fee competitors.

But that’s only half the story.

The Consumer Services segment, which includes wallets, bill pay, and travel money, exploded 49% year over year. Digital transactions climbed 12%, marking the eighth straight quarter of healthy growth. Both GAAP and adjusted operating margins improved to 20%, a sign that the company is becoming more efficient even as it invests in its shift toward digital.

Cash generation remains the anchor. Year to date, Western Union has produced more than $400 million in operating cash flow and returned over $430 million to shareholders through buybacks and dividends.

This isn’t a company gasping for air. It’s a company trimming fat and redirecting energy.

The Value Meter focuses on what a business actually produces, not the story told around it. And the cash numbers here speak loudly.

Western Union’s enterprise value-to-net asset value ratio is 4.95, a small premium to the broad universe’s 3.80. That’s not ideal, but the next metric wipes away most of the concern: Free cash flow-to-NAV sits at 13.21%, compared with the universe’s 1.13%.

That’s not just “better.” It’s in a different league. Western Union generates cash almost 12 times more efficiently than the typical company.

Its 12-quarter free cash flow consistency also edges out the universe average, showing a pattern of steady improvement rather than erratic spurts.

Meanwhile, the stock looks like it’s been sentenced to the penalty box. It’s the kind of chart you see when investors doubt a company’s long-term relevance. But doubt isn’t the same as decline, and the fundamentals don’t match the pessimism baked into the price.

Western Union isn’t morphing into a high-growth fintech, and it doesn’t need to. It just needs to keep expanding its higher-margin services and nudge more of its customer base toward digital.

If it does that – and the past year suggests it’s already doing it – the market’s expectations look too low.

The Value Meter rates Western Union as “Slightly Undervalued.”

What stock would you like me to run through The Value Meter next? Post the ticker symbol(s) in the comments section below.

The post The Market’s Missing Something Big With This Bank’s Stock appeared first on Wealthy Retirement.

So, while Chief Income Strategist Marc Lichtenfeld is out this week, I thought it would be fun to shake things up a bit and review all three of these stocks at one time – pitting them against one another to find the ultimate champion.

Let’s start by looking at T. Rowe Price, an investment management firm similar to Vanguard or Fidelity. A huge amount of the company’s income comes from investment advisory fees, and revenue has seen a steady increase in the past year. At current prices, the stock yields 4.8%.

Free cash flow took a massive hit in both 2022 and 2023. However, 2024 saw a bounce back with a 38.5% gain, and free cash flow is projected to nearly double this year.

A major downside is that T. Rowe Price’s dividend payout ratio currently sits at 90%, which is above our threshold of 75%. The good news is that the company has increased its dividend every year for the last decade, earning it some brownie points.

Next, let’s talk about Western Union. This company specializes in money transfer, allowing its customers to securely send money to people or businesses across borders. The company covers the areas that banks can’t by acting as a liaison for those that don’t have a bank account or who need cash immediately. (A bank wire transfer can take one to three days.)

Turning to the safety of its dividend, we see a couple of red flags that could jeopardize its attractive 11.2% yield.

First off, Western Union’s free cash flow has been all over the place. It peaked in 2021 at $900 million but has been bouncing around ever since. Free cash flow in 2024 was down 50% from the previous year and down 60% from three years prior.

On top of that, Western Union announced in August that it will be acquiring International Money Express (Nasdaq: IMXI), which will result in a major hit to the company’s free cash flow.

The company’s dividend payout ratio, just like T. Rowe Price’s, is sitting above our 75% threshold at 90%.

Finally, let’s look at Peoples Bancorp, a company that provides banking services from Ohio to Maryland. The stock yields a solid 5.5%.

The company’s biggest revenue source is net interest income, or NII – the difference between the money it earns from loans and investments and the interest expense it pays on deposits. We will be using that metric to measure free cash flow.

NII is up both on the year and over the last three years. The forward-looking estimates predict an even larger increase this year.

The company’s payout ratio currently sits at 16%, well below our 75% threshold. Its balance sheet looks stellar as well.

On top of all of that, Peoples Bancorp has increased its dividend every year for the past 10 years.

Now, it’s time to reveal the results of our first-ever Clash of the Finance Titans (it’s a working title).

In third place, we have Western Union with a grade of “F.”

Based on our scoring system, the company’s dividend has a high risk of being cut. I’m concerned about its inconsistent cash flow and high payout ratio.

In second, we have T. Rowe Price with a “C.”

There’s some risk here, but the company’s cash flow growth projections and strong dividend track record should help.

And in first place, we have Peoples Bancorp with a mighty “A.”

This is one of the safest dividends I’ve ever seen. I’d even go as far as to say that you’re more likely to see a dividend raise than a dividend cut.

Western Union Dividend Safety Rating: F

T. Rowe Price Dividend Safety Rating: C

Peoples Bancorp Dividend Safety Rating: A

If you enjoyed this format, let us know by either commenting below or sending us an email here.

And, as always, feel free to send us more companies whose dividends you’d like us to review.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name, and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds, or closed-end funds.

The post The Clash of the Finance Titans appeared first on Wealthy Retirement.

As they do every quarter, the big investment banks launched the reporting season for quarterly financial results.

JPMorgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC) both reported results last Friday, and the market was watching closely for an update on the health of both consumers and businesses.

Those big money center banks – together with rivals like Citigroup (NYSE: C) and Bank of America (NYSE: BAC) – are major pipelines for money moving through the economy. As such, they can provide bountiful information about both borrowing and spending (two activities that are vital to economic growth).

And while loan demand remained weak in the third quarter – mostly due to elevated interest rates engineered by the Federal Reserve since early 2022 – consumer finances and spending continue to be healthy, despite the higher inflation of the last few years. With consumer spending driving roughly two-thirds of economic activity, that’s a very good sign indeed… for both the economy and investors.

In fact, industry analysts were predicting worse earnings for the big banks due to the still-meager lending demand. But the banks have outperformed those expectations so far, and their earnings are expected to improve going forward as the Fed lowers interest rates and loan demand rebounds.

As a result, both JPMorgan’s and Wells Fargo’s stocks soared, recording their best daily performances since April 2023 and February 2024, respectively. The S&P 500 also rose on the news.

FactSet tracks both earnings estimates by equity analysts and actual earnings, and it predicts the S&P 500 will report earnings growth of about 7% this quarter (compared with the same quarter a year ago).

And as you can see in the chart below, S&P 500 overall earnings have been growing at an accelerating pace since the third quarter of 2023…

As Chief Investment Strategist Alexander Green periodically reminds us, a company’s earnings growth is the best indicator of where its stock price will go in the medium to long term. By extension, the aggregate earnings of an index are the best indicator of where the broader market (as measured by the S&P 500 in this case) will go in the medium to long term.

Much More to Come

Bottom line: If earnings continue to grow as they have been for the last four quarters, it’s a very good sign that the current two-year bull market can continue to climb.

(That’s assuming there isn’t a shock like a war involving the U.S. or a spike in oil prices, of course.)

And there’s much more to come. Smart investors will be watching the earnings of several bellwether companies over the next few weeks to get a more accurate measure of the health of consumers and businesses. These companies include airlines, manufacturers, automakers, restaurant chains, and mega tech companies closely linked to artificial intelligence.

So we should all continue to monitor corporate earnings. As they go, so go the prices of the stocks we own and the long-term health of our portfolios.

The post Earnings Season Already Delivering Good News for the Market appeared first on Wealthy Retirement.

The Oxford Club certainly adheres to this theory. The Oxford Wealth Pyramid, which we consider to be “the blueprint for financial independence,” recommends that your portfolio includes a core portfolio, “Blue Chip Outperformers,” targeted trading, and other strategies to ensure a broad mix of investments that should pay off over the long and short term.

But it’s not just about diversifying your stocks or even diversifying across asset classes. I recommend you also diversify where you keep your investments and cash. I learned the hard way about the risk of having most of my money in just one financial institution.

Shortly before the global financial crisis, I invested nearly all of my cash in what were supposed to be very short-term, very conservative notes. I expected that my cash would earn a superior interest rate and would be available to me when I needed it.

But when the economy and financial markets seized up, my broker froze those notes – and my cash along with it.

I eventually got all of my money back, but it was a long year until I did.

At the same time, my bank – one of the largest in the country – went under. Fortunately, the larger bank that rescued it handled the transition seamlessly (though they’ve been awful to deal with ever since).

After those two harrowing experiences, I vowed to never be in the same situation again. I now make sure to spread my investments and cash over various financial institutions. That way, if one goes down and my assets are locked up, I’m not scrambling trying to figure out how to pay the mortgage.

Unfortunately, as I write this, more than 100,000 banking customers who used various “fintech” apps have been locked out of their accounts for nearly two months. Fintech, short for “financial technology,” refers to technology that supports banking – often in the form of third-party apps that connect to bank or financial institution accounts.

In this case, Synapse, a company that served as a middleman between the fintech apps and the banks, went bankrupt and locked users out of their accounts. Most users probably didn’t even know Synapse was part of their transaction process.

Having multiple bank and brokerage accounts is not terribly convenient. You have to keep track of more accounts, more user IDs and more passwords. But just in case something unfortunate happens in the coming years – and let’s face it, between the economy, cyberattacks, a shaky electric grid and good old-fashioned mismanagement, it probably will – it’s a good idea to have assets in a number of different places.

It’s like having a coffee can stuffed with cash in the cupboard and a shoebox full of cash buried in the backyard. Even if someone were to steal the coffee can, you’d still have the shoebox – only in this case, the shoebox is called Fidelity, Schwab, Vanguard, etc.

The stress of having my savings locked up for a year was awful. I’ll never again allow one institution to have that much of an effect on my life.

Diversify your financial relationships just like you do your portfolio.

The post The Hidden Truth About Diversification appeared first on Wealthy Retirement.

And today, I’ve invited Shah Gilani from Manward Press to share his take. Check it out below!

– Rachel Gearhart, Publisher

Interest rates, interest rates, interest rates…

2024 will be all about interest rates.

The U.S. mortgage market just had its strongest week in months. According to the Mortgage Bankers Association, in the week ending December 1, total home loan applications increased by 2.8% compared with the previous week.

That’s good news, I guess… if you think mortgage rates being at 7.17% is something to cheer about.

At least they’re moving in the right direction.

But that good news applies only to residential real estate.

There’s still a huge problem lurking inside the commercial real estate (CRE) market…

Record office vacancies.

That’s bad enough on its own… but add to it the significant number of commercial mortgages due for refinancing in the coming years… and the fact that new lending rates for CRE are expected to be considerably higher than existing mortgage rates…

And you get a recipe for disaster for banks that hold real estate loans for office buildings in big cities such as New York, Los Angeles and San Francisco.

Here’s what I mean…

Situation: Dire

Office vacancies in New York City recently hit a record 22.7%, up from a decadeslong average of 11%.

In San Francisco, things are even worse. Office vacancies recently reached 33.9%, a new high for the city.

In fact, the vacancy rate in San Francisco has hit new highs every quarter for nearly two years.

Many of the problems facing office building owners and investors started with the pandemic. While it’s possible that over time we could see more workers return to the office, we are very unlikely to see a wholesale shift.

That means vacancy rates will remain high… at a time when commercial mortgages are due to be refinanced at higher rates.

The problems are so dire in some areas of the CRE market that landlords have simply stopped paying mortgages or have declined to refinance. In some cases, the banks that issued loans to these landlords have started to repossess the buildings.

And that’s no good.

Some of the biggest names in CRE, like Brookfield and Blackstone, have defaulted on mortgages and handed back the keys to their office towers.

This is a shrewd business move if you’re a landlord… but a disaster if you’re the bank that financed the loan.

I see the biggest risks for banks that have a lot of exposure to CRE, specifically office space, in the nation’s largest cities.

They’ll be in trouble… and soon.

Of course… that spells huge opportunity for investors who see the writing on the wall.

I’m playing this trend by identifying banks that have large exposure to CRE as a percentage of their total loan volume. I’m targeting them by using put options with expiration dates that go out to the second half of 2024.

I prefer using put options rather than shorting the stocks. Purchasing a put option gives you a capped downside (the amount you paid for the options) and unlimited upside.

Over the next 18 to 24 months, the action is going to be fast and furious… thanks to the $1.5 trillion in loans coming due by the end of 2025.

The post How to Play the Troubled Commercial Real Estate Market appeared first on Wealthy Retirement.

Why does that matter to us here at Wealthy Retirement?

Because right from the bottom of the COVID-19 crash last spring, we have been pounding the table on bank stocks.

It took a bit of time for Mr. Market to agree with us, but our call on the banks has delivered. Financial stocks have thrashed the market since last spring.

It has been a great time to own the banking sector, and the good times aren’t over.

Recently, the U.S. Federal Reserve released the results of its latest “stress test” on the U.S. banking sector. The stress test is designed to show whether or not each bank has the financial stability to withstand a major global recession.

All 23 of the major U.S. banks passed with flying colors.

With these results, shareholders of U.S. banks are going to be well rewarded.

Last June, the Fed imposed limits on how much banks could return to shareholders through dividends and share repurchases.

(As Chief Income Strategist Marc Lichtenfeld pointed out in yesterday’s article, share buybacks are often a bad omen for stock performance. In the case of my favorite bank stock, I believe share buybacks will benefit shareholders because bank valuations are cheap. More on that in a moment.)

The goal was to make sure the banking system stayed strong so that it could support an economy weakened by COVID-19.

With bank balance sheets in incredible shape and the economy recovering quickly, the Fed is now removing those restrictions.

That means the amount of cash that U.S. banks are distributing to shareholders is about to increase.

Wells Fargo Just Announced a Huge Cash Return

My absolute favorite bank stock over the past year has been Wells Fargo (NYSE: WFC).

In early October, I wrote about the stock’s then insanely cheap valuation.

At that time, the total market valuation for Wells Fargo had dipped to just $90 billion.

Against that entry price, the cash returns that Wells Fargo shareholders are about to receive over the next year are incredible.

With the Fed lifting payout restrictions, Wells Fargo has indicated that it intends to return more than $21.3 billion to shareholders over the next 12 months.

That $21.3 billion will be split as follows:

• $3.3 billion in dividends
• $18 billion in share buybacks.

For those of you who were buying shares at $22 with a $90 billion stock market valuation, it means you are now earning an annual cash payout from Wells Fargo of 23.6%. These huge share buybacks are going to dramatically reduce the number of shares Wells Fargo has outstanding.

With Wells Fargo’s current share price near $45, a total of $18 billion in buybacks will reduce Wells Fargo’s share count by 10% in just 12 months.

For share repurchases to be a good idea, they have to be done when a company’s shares are attractively valued. Given that Wells Fargo can reduce its share count by 10% in just one year, we know that the company is getting a good deal.

When it comes to share buybacks, a company should think like an investor. That means buying low and selling (issuing shares) high. That is exactly what Wells Fargo and the banking industry are doing.

With these buybacks, Wells Fargo’s share count will drop from 4.1 billion shares to 3.7 billion shares.

To appreciate how powerful this share count reduction will be, consider that Wells Fargo is expected to earn $20 billion next year.

With 4.1 billion shares outstanding, $20 billion in earnings equates to $4.87 in earnings per share.

(Remember, it is always earnings per share that matters to us as investors.)

After a year of buybacks, at the reduced 3.7 billion share count, the same $20 billion in earnings equates to $5.40 in earnings per share, which is 11% higher.

That means with just one year of share repurchases, Wells Fargo will have created 11% per share earnings growth even if total earnings don’t increase.

And Wells Fargo has the earnings power to buy back this amount of stock every year! That means double-digit earnings per share growth just because of the buybacks alone.

At this pace, Wells Fargo could repurchase every outstanding share in just 10 years, assuming that earnings stay constant.

If you will recall from my earlier pieces on Wells Fargo, I believe there is significant earnings growth coming.

Wells Fargo’s management has indicated that it expects to drive $8 billion of earnings growth in the coming years by bringing the company’s expenses in line with those of the rest of the industry.

And if interest rates start rising, driving wider lending margins, Wells Fargo’s earnings will increase even more.

Wells Fargo has already been a big winner – and with the cash returned to shareholders exploding higher, this ride on the American banking sector is going to just keep getting better.

Good investing,

Jody

The post This Play on American Banks Just Keeps Getting Better appeared first on Wealthy Retirement.

It’s a solid traditional regional bank with an attractive 5.4% dividend yield. It’s not surprising that we get a lot of questions about its dividend safety.

New York Community Bancorp operates 240 branches in five different states. The company specializes in multifamily loans.

With interest rates at all-time lows, it’s been very difficult for banks to maintain, let alone grow, their net interest income (NII).

NII is the difference between the interest a bank earns on its loans and the interest it pays out on its deposits.

Think of NII as a bank’s free cash flow. Banks use it to pay dividends.

Low rates make it hard for banks to earn interest on the loans they give out.

But New York Community Bancorp has been successful navigating today’s low interest rate environment. It has been able to maintain its NII throughout the pandemic.

Over the last decade, the company’s NII has flattened. However, Wall Street analysts expect NII to increase 18.2%, from $1.1 billion in 2020 to $1.3 billion in 2021.

New York Community Bancorp has not raised its dividend in more than 10 years. In fact, the company actually lowered its dividend per share from $1 to $0.68 back in 2016. The bank has maintained its payout ever since.

Through it all, New York Community Bancorp has maintained a very low dividend payout ratio. Normally, SafetyNet Pro likes to see a payout ratio under 100% for financial companies.

New York Community Bancorp’s payout ratio was just 34.5% in 2020, and it is projected to be only 26.8% in 2021!

This means the company has more than triple the cash coming in than it needs to support its dividend payments.

Even if NII falls, New York Community Bancorp should still be able to generate enough cash to cover its current dividend obligation.

The company’s NII growth expectations and its exceptionally low payout ratio make its dividend relatively safe.

Dividend Safety Rating: B

If you have a stock whose dividend safety you would like Marc to analyze, leave the ticker symbol in the comments section.

Good investing,

Kyle

P.S. Did you catch the 4X Stock Booster Summit with Marc, Chief Investment Strategist Alexander Green and TradeSmith CEO Keith Kaplan? If you missed it – and want to earn up to 4X more on all of your regular trades without using options or leverage – click here.

The post Can You Bank on This Dividend? appeared first on Wealthy Retirement.

This beaten-down industry went into the COVID-19 crash boasting the strongest balance sheets its companies have ever had, suggesting that the downturn handed investors a unique buying opportunity.

Our friends at Trade of the Day couldn’t agree more. So today, we’re sharing analysis from expert Karim Rahemtulla on a stock we’ve mentioned here at Wealthy Retirement before…

A stock that our experts love for the long term and that Karim loves for the short term.

Read on for the details on this special stock – including a price target for buying.

And if you’re interested in more short-term action, consider joining Karim and his trading partner, Bryan Bottarelli, in The War Room, a special community of likeminded investors who have one goal: to make successful trades.

Last month, their team saw an average of three winners per day – thanks in part to a special strategy that helps members transform their portfolios overnight.

Click here to learn how you can enter The War Room.

– Mable Buchanan, Managing Editor

Banks were hammered by the effects of COVID-19 early on in the crisis. The big players, like Bank of America (NYSE: BAC), JPMorgan Chase (NYSE: JPM) and Citigroup (NYSE: C), all saw shares fall by as much as 50% from pre-COVID-19 levels.

Some, like Wells Fargo (NYSE: WFC), dropped even more.

The Fed forced them to tighten their belt, cut, reduce or limit their dividends, stop share buybacks, and use very stringent lending standards.

They’re not out of the woods yet, but the sector is much healthier than it was six months ago.

This improvement can be seen in several ways…

1. Deposits are increasing.
2. Loan losses are moderating and reserving less quarter over quarter.
3. Banks are buying back their own shares again as the Fed recognizes that the trillions in stimulus checks have benefited them by reducing loan losses.

In fact, many banks should begin to claw back the money they set aside, which will show up in their earnings reports.

So which bank should you buy?

My pick is Wells Fargo, but with a few conditions…

• Buy the first half on a pullback to less than $30 per share – which shares currently trade right above.
• Add the second half at $28 or less to make up a full position.

Wells Fargo became the poster child for “bad banks” after it was accused of falsifying new customer accounts. It paid a huge price: sanctions on asset accumulation, forced resignations of C-level executives, billions in fines and greater supervision.

After all of that, Wells Fargo shares are now the cheapest of all the major banks based on book value. And the company still maintains a huge base of deposits, more than $1 trillion, and the ability to benefit from an upward-trending economic cycle.

I believe we will see a much better 2021. Trillions in stimulus, vaccines, consumer optimism and rising interest rates are all great news for banks.

Good investing,

Karim

P.S. In The War Room, I have been pounding the table on banks for months, and members were in on the story well before the general public chimed in.

Isn’t it time you got “early access” to the type of economic analysis that could really pad your market returns? Join me now for real-time recommendations!

The post Buy THIS Bank Stock appeared first on Wealthy Retirement.

And we’re not the only ones with big goals for the future…

Chief Income Strategist Marc Lichtenfeld and Chief Investment Strategist Alexander Green recently sat down with a special investor who’s pinpointed a strategy for earning 4X more on all of your regular trades.

Their 4X Stock Booster Summit is still available to stream for a limited time online. Just click here.

If financial security and wealth building have earned a place among your 2021 New Year’s resolutions, you won’t want to miss this.

– Mable Buchanan, Managing Editor

In May, I said that within 12 to 18 months, we would look back on bank stocks as having been the no-brainer buying opportunity of the pandemic.

My reasoning was that while the share prices of the banks had been beaten down, their long-term earnings power hadn’t been diminished.

I made the call that within two years, the banks would earn just as much as they did in 2019 and that their share prices would follow those earnings back to pre-pandemic levels.

I based all of this on the fact that going into the pandemic, the big banks’ balance sheets were in their strongest position in recent memory.

Since the financial crisis, the balance sheets of the companies in the entire sector have been recapitalized, loan underwriting standards have been upgraded, leverage levels have been reduced and regulators have stayed on top of banks like never before.

I believed that with their strong balance sheets, the banks could comfortably handle the loan losses that the pandemic would throw at them.

My conviction on this trade was high, but I also cautioned that some patience would be required. I didn’t expect much for at least a couple of quarters as the banks built up their loan-loss reserves.

I am happy to report that the trade is playing out exactly as I hoped.

After trailing the market for six months as those loss reserves were built, banks’ share prices started ripping higher at the beginning of October.

In the last quarter of 2020, the banking sector has surged more than 40%.

I believe there is more outperformance to come…

The Fed Gives the Big Banks the “All-Clear”

Back in the second quarter of 2020, the U.S. Federal Reserve imposed a limit on the amount of dividends that banks could pay and placed a complete ban on share buybacks.

Instead of dividends and repurchases, the Fed wanted that cash to strengthen bank balance sheets.

Priority No. 1 was having a strong banking system that could help our economy manage through the pandemic.

Late in December, after putting the banks through another round of stress test exercises, the Fed announced that the ban on share repurchases would be lifted.

This showed that the Fed believed banks had officially weathered the worst of the pandemic and emerged in great financial shape.

This is terrific news for those of us who have been pounding the table on banks since the pandemic started.

This Stock Can Still Double

This news from the Fed makes me even more bullish on one bank stock in particular: Wells Fargo (NYSE: WFC).

While Wells Fargo’s share price is up 50% from its pandemic low, I believe there is still tons of upside left.

Over the decade prior to the pandemic, shares of Wells Fargo traded at a price to tangible book value of 1.8 or higher.

Today, Wells Fargo trades at just 0.98 times price to tangible book value.

To get back to where the stock normally trades, the share price still has to nearly double.

I believe that it will. There is a massive catalyst coming to help it get there…

A huge boost to earnings.

While competitors like Bank of America (NYSE: BAC) and Citigroup (NYSE: C) have streamlined their operations over the past decade, Wells Fargo hasn’t.

New management at Wells Fargo has identified $10 billion of low-hanging cost cuts that will be fairly easy to realize.

That would add $2 per share to earnings for Wells Fargo.

With banks normally trading at roughly 10 times earnings, that could mean a $20 increase to Wells Fargo’s current $30 share price.

Again, this $10 billion reduction in costs isn’t something that is going to happen overnight.

But over the next 12 to 18 months, those cost cuts will start working into Wells Fargo’s earnings.

As that happens, the market will start acknowledging that with a much higher share price.

I think this could be a $60 stock two years from now.

Good investing,

Jody

The post The No-Brainer Buying Opportunity of the Pandemic appeared first on Wealthy Retirement.

It’s one thing to see your stock slip temporarily. It’s another to see your income get reduced as a result of a dividend cut. That can affect your budget, spending and lifestyle.

So I went searching for the safest (but still solid) yield on the market…

What I found was Huntington Bancshares (Nasdaq: HBAN). Huntington Bancshares is the holding company for Columbus, Ohio-based Huntington Bank. The 154-year-old bank has $120 billion in assets, with 800 branches in seven Midwestern states.

It currently pays a $0.15 per share quarterly dividend, which comes out to a 5% yield.

The bank has raised its dividend every year since 2011.

Growing Net Interest Income

Despite a very difficult environment for banks, Huntington Bancshares has grown its net interest income (NII), the amount of money a bank makes for lending its capital minus paying depositors and expenses.

NII is how we look at a bank’s ability to pay its dividend.

Interest rates have been at rock-bottom levels, which makes it difficult for banks to generate income, and the economy is not in terrific shape these days because of the pandemic.

Nevertheless, Huntington Bancshares is expected to grow its NII in 2020.

So you have a company with a solid dividend-paying history and growing NII – and both are important. But here’s the main reason I believe the dividend is safe…

Huntington Bancshares has a minuscule payout ratio.

A company’s payout ratio is the percentage of its earnings, cash flow, NII or other metrics that is paid out in dividends.

Generally speaking, for most companies, I want to see a payout ratio of 75% or lower. During the pandemic, I’ve reduced that threshold to 50% to be extra safe.

If a company has a payout ratio below my limit, it should have no problem paying the dividend, even if the economy and business get worse.

Huntington Bancshares pays out a ridiculously low 21% of its NII in dividends.

That should give it plenty of room to raise the dividend in the future – and if things really get bad, it will still have enough NII to at least sustain the dividend.

It’s not easy to find safe high-yielding companies these days. Huntington Bancshares is one of the safest.

Dividend Safety Rating: A

If you have a stock whose dividend safety you’d like me to analyze, leave the ticker in the comments section.

Have a happy and safe Thanksgiving.

Good investing,

Marc

The post The Safest 5% Yield on the Market appeared first on Wealthy Retirement.