Is Wells Fargo & Company (NYSE:WFC) A Smart Pick For Income Investors?
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Wells Fargo & Company (NYSE:WFC) has returned to shareholders over the past 10 years, an average dividend yield of 3.00% annually. Let’s dig deeper into whether Wells Fargo should have a place in your portfolio. View out our latest analysis for Wells Fargo
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Does it pay an annual yield higher than 75% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has the amount of dividend per share grown over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will the company be able to keep paying dividend based on the future earnings growth?
Does Wells Fargo pass our checks?
The company currently pays out 38.14% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 35.53%, leading to a dividend yield of around 3.22%. Moreover, EPS should increase to $4.59.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time.
In terms of its peers, Wells Fargo produces a yield of 2.83%, which is on the low-side for Banks stocks.
Next Steps:
With these dividend metrics in mind, I definitely rank Wells Fargo as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three key aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for WFC’s future growth? Take a look at our free research report of analyst consensus for WFC’s outlook.
Valuation: What is WFC worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether WFC is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
