Wells Fargo & Co (WFC): Following Buffett Into This High Quality Bank

In terms of price to book value and price to earnings, Wells Fargo is reasonably priced from a historical perspective, and still trading well below pre-crisis level.

The bank is also yielding a 3% in dividends, and it got approval from the Federal Reserve to increase both its dividends and buyback program back in March. The dividend payout ratio is only 25.5% of earnings, and those earnings will continue benefitting from the real estate recovery in the long term, so investors have some strong reasons to expect growing dividends from Wells Fargo & Co (NYSE:WFC) over the next years

Bottom Line

Wells Fargo has a smart management team implementing a simple and straightforward business model and avoiding excessive risk taking, this has produced superior profitability for investors, and it has positioned the bank in a privileged place to benefit from the real estate recovery in the long term. The stock is still trading at reasonable valuation levels, so there are good reasons to join Warren Buffett by investing in Wells Fargo.

Andrés Cardenal owns shares of Bank of America Corp (NYSE:BAC). The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup Inc (NYSE:C), JPMorgan Chase & Co. (NYSE:JPM), and Wells Fargo.

The article Following Buffett Into This High Quality Bank originally appeared on Fool.com.

Andrés is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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