5 Best Passive Income Stocks to Buy Now

3. Wells Fargo & Company (NYSE:WFC)

Number of Hedge Fund Holders: 93

Dividend Yield as of June 3: 2.21%

Wells Fargo & Company (NYSE:WFC) is a California-based diversified financial services corporation that provides a wide variety of services ranging from consumer, corporate, and investment banking with an asset base of over $1.9 trillion. The bank has been operating with an asset cap of $1.95 trillion placed by the Federal Reserve following the sales practice scandal in 2018. Wells Fargo & Company (NYSE:WFC) announced a quarterly dividend of $0.25 per share on April 26, translating into a dividend yield of 2.21% as of June 3.

Wells Fargo & Company (NYSE:WFC) has been known for focusing on consumer-based lending through its commercial bank, but it now wants to increase its focus on corporate deal-making operations and trading. CEO Charles Scharf highlighted that nearly 50% of the company’s top line came from the corporate and investment banking segment and the services to middle-market companies. Wells Fargo & Company (NYSE:WFC) intends to focus more on its public underwriting business and investment banking services for its existing clients.

Davis Funds shared its stance on Wells Fargo & Company (NYSE:WFC) in its Q3 2021 investor letter.

“The absolute level of revenues and profits generated by such companies is in fact so large that most of the major financial holdings in the portfolio produce enough annual operating income individually that a number of them could, in theory, purchase several entire businesses among hundreds of choices within the S&P 1500 Index, using just a year’s cash earnings without dipping into capital. This is theoretical, as financial companies would not be in the business of buying healthcare or technology companies, for example, but we point out these facts to illustrate the sheer scale of the economics produced by single financial companies in a given year, which is often a multiple of the cash earnings yielded by companies in a host of other industries.

Given this cash-generation power, we are naturally drawn to what we believe are strong and profitable financial institutions when the price is right. Presently, we believe the valuations of our financial holdings are not only reasonable, but extremely compelling, and our portfolio composition reflects this view. Representative financial holdings in the Fund includes Wells Fargo.”

Wells Fargo & Company (NYSE:WFC) was held by 93 hedge funds as of Q1 2022.