Wells Fargo (WFC) has been a long time holding in the Net Payout Yield Portfolio mainly because the company use to pay a sizable dividend. WFC also has one of the best management teams in the banking sector.
The position size has remained small for a while mainly due to the cut of the dividend back in the financial crisis. WFC currently pays a annual divy of $.20 amounting to paltry 0.8%. Nothing worthwhile of the Net Payout Yield which typically finds companies with yield exceeding 5-6%.
Today, the CFO announced at the BancAnalysts Association of Boston conference that they were working on plans of reinstating a dividend that eventually would match the 35-40% payout ratio from before the crisis. At current stock prices, that would place the divy over 4% based on the estimate of earnings at $2.8 in 2011. WFC becomes a lot more attractive to investors with a 4%+ divy. Looking at adding to the position prior to such a move.
Via Dow Jones Newswires: