That being said, Bank of America Corp (NYSE:BAC) has reported a number of positive catalysts recently, in addition to the company posting better-than-expected earnings. Bank of America Corp (NYSE:BAC) recently announced that the company’s Board of Directors authorized the repurchase of up to $5.0 billion of common stock and the redemption of approximately $5.5 billion in preferred stock. Bank of America Corp (NYSE:BAC) is extremely confident in its capital structure, and these moves demonstrate its intention of returning excess cash to shareholders.
Wells Fargo arguably performed the best of the nation’s big banks last year. The nation’s biggest mortgage lender reported record fourth-quarter net income that handily beat earnings expectations. Full-year net income was up 19% year over year, and earnings per share for the entire year came in at a record $3.36. Revenue for the fiscal year clocked in at over $86 billion, up 6% from the prior year.
The best of the bunch
The mounting legal fees the banks have shelled out to settle claims and damages represent huge sums of money, but it appears that the market is not overly concerned. Bank shares have rallied significantly in recent months, as profitability and dividend payments return to our financial institutions. It finally seems like our nation’s biggest banks are getting their businesses back on track.
In particular, JP Morgan Chase and Wells Fargo appear to be the banks in the most solid financial positions. The London Whale, while indeed significant, was a one-time issue that is resolved, and now JP Morgan Chase and its investors can move forward. In addition, the stock trades for a very attractive trailing price-to-earnings ratio of 9, which compares favorably to Citigroup’s 18 P/E and Bank of America’s 48 P/E. Moreover, JP Morgan Chase pays a hefty dividend yield of 3%.
Wells Fargo, meanwhile, is one of the safest of the large American banks. The company increased its dividend payout 16% in January, and the raise reflects the company’s confidence in its performance as well as its commitment to returning cash to shareholders. At its current level of $1.00 per share, the dividend yields almost 3% at recent prices. Moreover, Wells Fargo is a bank that doesn’t take huge lending risks, doesn’t have a massive trading business, and has a growing dividend. As a result, investors looking to buy bank stocks should give preference to JP Morgan Chase and Wells Fargo.
Robert Ciura has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup Inc , JPMorgan Chase & Co., and Wells Fargo.
