As The Market Collapses – Think… Who Makes Money All The Time: Banks

The best “blue chip” value in the market today can arguably be found in the biggest American banks.

These companies are returning an incredible amount of capital to shareholders. We are talking about DOUBLE-DIGIT shareholder yields here.

Plus, some very smart financial sector investors believe that balance sheets of the big banks are perhaps safer than they have ever been. And as the market temporarily collapses this week due to coronavirus concerns… safe is good!

In a market where most large cap stocks are looking very pricey the big banks may be the rare exception.

The Numbers Make A Very Compelling Investment Case

The banks I’m referring to are the big boys. Wells Fargo, Bank of America, Citigroup, JP Morgan…..the 800 pound gorillas of the industry. Companies with balance sheets that have total assets that are in the trillions of dollars.

Literally — the balance sheets of these behemoths are larger than many countries.

Personally, I find the banking business boring. And I’m not wrong, because the banking business should be boring. When banking gets exciting — it isn’t exciting for good reasons.

Right now the banking business is definitely boring. Slow, steady. Not much going on.

What isn’t boring is how much money the big American banks are paying out to their shareholders through dividends and share repurchases.

Have a look at the table below which compares buybacks + dividends against the current market caps of the four big banks.

Wowzers! Double digit yields from all of them (JP Morgan is a smidge under). Three of them are well into the double digits.

To be clear, the projected buyback levels are what the companies have approved for 2019. Through the first three quarters they are all on track to meet those levels.

Dividends and share repurchases are both returns of capital to shareholders. The money could be allocated to either, the Board of Directors of a company decides.

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This article was written by Keith Schaefer, Editor/Publisher. We did not receive compensation for this article, and we have no business relationship with any company whose stock is ...

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