Wells Fargo & Co (WFC), Bank of America Corp (BAC), Citigroup Inc (C): 3 Industry Leaders With Strong Dividend Growth Prospects

Making good investment decisions doesn´t need to be too complicated. On the contrary, sometimes the best alternatives are the most simple and straightforward. The following three industry leaders have rock solid competitive positions, nice dividend yields, and more than enough resources to continue raising their payments in the long term. You don´t need a degree in rocket science to tell that they are positioned to deliver solid returns for investors over the next few years.

Banking on a recovery

Among the big US banks, Wells Fargo & Co (NYSE:WFC) stands out as the best of breed when it comes to risk management and financial soundness. While competitors like Bank of America Corp (NYSE:BAC) and Citigroup Inc (NYSE:C) made terrible mistakes by loading their balance sheets with toxic assets and complex derivatives during the credit bubble, Wells Fargo & Co (NYSE:WFC) kept doing what it does best: lending money to deserving clients.

The rest is history, the bubble exploded, and companies like Bank of America Corp (NYSE:BAC) and Citigroup Inc (NYSE:C) had to spend several years cleaning up their balance sheets and streamlining their operations. Wells Fargo & Co (NYSE:WFC), on the other hand, seized the opportunity and capitalized its financial strength to make strategic acquisitions like the opportunistic purchase of Wachovia back in 2008.

Superior risk management has translated into market share gains for Wells Fargo & Co (NYSE:WFC), and the bank is now positioned as the undisputed leader in the US mortgage business. Bank of America Corp (NYSE:BAC) and Citigroup Inc (NYSE:C) have reduced their mortgage businesses to a shadow of their former selves, and Wells Fargo & Co (NYSE:WFC) was the main beneficiary from this upheaval in the US banking industry.

According to data from Inside Mortgage Finance, Wells Fargo & Co (NYSE:WFC) had a market share of 27.7% in US mortgage originations during 2012, while former industry leader Bank of America Corp (NYSE:BAC) is down to only 4.1%, and Citigroup Inc (NYSE:C) now accounts for a tiny 3.4% of the market.

Bank of America Corp (NYSE:BAC) and Citigroup Inc (NYSE:C) have come a long way in terms of improving the quality of their assets, and they are ready to focus on regaining some of the lost market share over the next years. But they are still way behind Wells Fargo when it comes to profitability, while Wells Fargo has a return on equity – ROE – ratio of 13.5%, Bank of America Corp (NYSE:BAC) has a much lower ROE around 1.6% and Citigroup Inc (NYSE:C) carries a ROE ratio on the area of 4.5%.