Wells Fargo & Co (WFC), JPMorgan Chase & Co. (JPM) – The Best Financial Companies: Head to Head

Goldman Sachs Group, Inc. (NYSE:GS) got a 10.8% return on its equity in the last year, while earning an ROA of 0.8%, an ROI of 3.1% and an NPM of 18.3%. Over the last five years, it has averaged an annual NPM of 9.8%, an ROA of 0.5% and an ROI of 1.8%.

Dividends and yield: Goldman Sachs Group, Inc. (NYSE:GS) has a low payout ratio of 13%. Its current annual dividend is $2 with a yield of 1.4%. Its annual yield over the last five years has been 1.3%.

Citigroup Inc (NYSE:C) is only paying out 1% of earnings, with an annual dividend of $0.04, yielding 0.1%. Citigroup’s average yield over the last five years has been 2.4%.

JPMorgan is paying an annual dividend of $1.52 that yields 3.2%, with the company’s payout ratio a low 21%. JPMorgan’s average dividend over five years has yielded 2.3%.

Wells Fargo’s dividend stats are similar to JPMorgan’s. It has a current payout ratio of 26, an annual dividend of $1.20 that yields 3.2%. Its average yield over the last five years has been 2.1%.

Below is one of the most popular exchange traded funds specializing in the financial services sector.

iShares Dow Jones U.S. Financial Services Index Fund

This ETF, created in June 2000, corresponds to the Dow Jones U.S. Financial Services Index. The index includes banks, investment brokers and other investment professional firms. Wells Fargo & Co (NYSE:WFC) (10.95%), JPMorgan Chase & Co. (NYSE:JPM) (10.94%) and Citigroup (8.29%) are the fund’s three largest holdings. Goldman Sachs accounts for the seventh largest holding at 3.67%. The fund has a current one-year return of 22.2%, a three-year annualized return of 4.41%, a five-year annualized return of -5.8% and a 10-year annualized return of -0.59%.

Many people believe JPMorgan is the frontrunner of this group, but all 4 are viable investments, given their long track record and past success.  The financial institutions are difficult to differentiate, and given the issues with this industry in the past 5-10 years, many people are avoiding them altogether.  However, this is another way to diversify your portfolio, so if nothing else, it is worth considering the ETF to gain exposure to the industry.  Take a look at your portfolio, and see what works before for you.

The article The Best Financial Companies: Head to Head originally appeared on Fool.com and is written by Daniel Murray.

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