Stock Buy - Wells Fargo Bank

Wells Fargo Bank Dividend History

  • Annual Dividend Yield of 3.20%
  • Annual Dividend Rate (IAD) $1.50
  • Payout Ratio (TTM) of 35.59%
  • Dividend Coverage Ratio (TTM) of 280.95%
  • 3 Year Dividend Growth Rate of 18.8%
  • 5 Year Dividend Growth Rate of 49.1%
  • 10 Year Dividend Growth Rate of 4.0%

Wells Fargo's 5 and 10 year dividend growth rates have a large variance. This is due to the 2009 market collapse. When WFC recovered in 2011, its dividend increased by 140%, then 83% in 2012. These two large increase have skewed the numbers. I'm focused on the 3-year dividend growth rate of 18.8%. I'm hopeful that this is a good guesstimate of future annual dividend increases.

Wells Fargo Bank Stock Buy - Dividend History -



The chart below compares Wells Fargo Bank to other large U.S. Banks. They all show unusually high dividend growth rates. Think 2009; it led to massive dividend cuts, followed by above average increases. Looking at the chart holistically, WFC has paid had the best overall dividend increases. This is my opinion, but I put much more weight on recency. WFC has an 3-year CAGR of 18.8%. The 3-year CAGR of Bank of America and Citigroup look better on paper. This is because these two banks took longer to recover and delayed their big dividend increases. Whereas JP Morgan Chase and Wells Fargo Bank increased their dividends a few years earlier.


(Click on image to enlarge)

Wells Fargo Bank Dividends Compared to Other US Major Banks



Wells Fargo Bank Stock Valuation

  • S&P Capital IQ ranks Wells Fargo Bank 4-stars, with a 12-month price target of $57.00 and a current fair value of $53.20.
  • Morningstar ranks Wells Fargo Bank 4-stars, with a fair value calculation of $61.00.

The F.A.S.T Graph below shows that Wells Fargo Bank is below the orange and blue lines. For those of you unfamiliar with this tool, when the black line falls below the orange line this indicates a stock is trading below the market average P/E Ratio of 15. If the black line falls below the blue line this indicates a stock is undervalued and is trading below its normal P/E Ratio. Per the graph, over the past 20-years, WFC has traded at an average P/E of 16.5. Today WFC stock is trading at a 11.3 P/E Ratio. Based on the graph below WFC is undervalued and in my buy zone.

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I am not a certified financial planner.  I am a personal investor and blogger who writes about my personal investing strategies.  Nothing I write should be used by anyone but me to make ...

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