Wells Fargo and Its Steady Climb to New Heights
On a day when the overall market is up less than a percent, the steady performer that is Wells Fargo is up nearly twice as much and should close the day at a new 52-week high. While long-term investors shouldn't be nearly as interested in the daily movement of a share price, the bank definitely deserves more attention than it often gets. Here are two reasons I like the bank.
Support from great investors
By now, anyone who invests in Wells Fargo is bound to know that Warren Buffett and Charlie Munger are big fans of the bank, and the bank is Berkshire Hathaway's largest stock holding, a position which he has been adding to nearly every quarter. But Buffett is not alone in being a fan of the big San Francisco bank. Former Buffett protege Lou Simpson, who formerly managed the portfolio at GEICO, has nearly 8% of his portfolio at SQ Advisors in Wells Fargo stock -- including a small addition during the first quarter -- making it his fourth-largest position.
He might not be as well-known as Buffett or Simpson, but Thomas Russo of Gardner Russo & Gardner is definitely a fan of the bank, adding to his position during the last quarter, which placed Wells Fargo squarely in the top ten of his portfolio of over 230 stocks. Though the average investor will probably never hold millions of shares in any company like these great investors, their example of adding to favorite positions is definitely something that can be mimicked on a much smaller scale.
Wells Fargo doesn't have the largest dividend of the Big Four banks -- that honor belongs to JPMorgan Chase -- but its current annual dividend of $1.20 per share greatly exceeds both Bank of America and Citigroup's paltry $0.04 per share annual payment. This dividend equates to a payout ratio of just over 25%, providing the bank with plenty of room to continue to grow its dividend going forward. It last boosted its dividend in March after receiving permission from the Fed as part of the stress tests, and should hopefully see a similar result early next year, especially if the bank can equal 2012's strong performance.
The bottom line
Wells Fargo may not make the "daily movers" list like compatriot Bank of America, but I think that this is primarily a function of the lower share prices and speculative nature of those stocks. Banking stalwarts like Wells Fargo and JPMorgan Chase tend to be viewed as the stronger of the Big Four banks, and it has been reflected in their performance over the past year. My favorite of the two is Wells Fargo, for many reasons beyond the two mentioned here.
Looking for even more of these reasons and whether the bank meets muster for your portfolio? To help figure out whether Wells Fargo is a buy today, I invite you to download our premium research report from one of The Motley Fool's top banking analysts. Click here now for instant access to this in-depth take on Wells Fargo.
The article Wells Fargo and Its Steady Climb to New Heights originally appeared on Fool.com.Fool contributor Robert Eberhard owns shares of Berkshire Hathaway. The Motley Fool recommends Berkshire Hathaway and Wells Fargo. The Motley Fool owns shares of Bank of America, Berkshire Hathaway, Citigroup, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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