Investing
6 Blue-Chip Dividend Financials Are Cheap and Warren Buffett Owns Billions of Shares
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The first quarter earnings season, for the most part, was an excellent start for the financial sector. Many leading mega-cap money center banks and top money management firms posted stellar results for the quarter. The positive results could bode well for others in a sector that has struggled over the last year.
Moreover, the top financial stocks have consistently paid outstanding dividends over the years, showcasing their reliability. In a stock market that has become over-bought and pricey in a rally dubbed the ‘everything rally,’ it’s prudent to consider these stocks for investments now.
Our 24/7 Wall St. financial sector database has identified six large-cap stocks that not only pay dependable and sizable dividends but also carry the endorsement of major Wall Street firms. Warren Buffett holds billions of shares in four of these stocks, further bolstering their investment potential.
Ally Financial
The bank, which has no buildings, pays a hefty 3.34% dividend, and Warren Buffett owns 29 million shares, almost 10% of the float. Ally Financial, Inc. (NYSE: ALLY) is a digital financial services company that provides various digital financial products and services to consumer, commercial, and corporate customers, primarily in the United States and Canada. The company was formerly known as GMAC.
It operates through four segments:
- Automotive Finance Operations
- Insurance Operations
- Mortgage Finance Operations
- Corporate Finance Operations
Ally Financial’s Automotive Finance Operations segment offers a comprehensive suite of automotive financing services. These include:
- Retail installment sales contracts
- Loans and operating leases,
- Term loans to dealers
- Financing dealer floor plans and other lines of credit to dealers
- Warehouse lines to automotive retailers
- Fleet financing.
The segment also provides financing services to companies and municipalities for the purchase or lease of vehicles, as well as vehicle-remarketing services. These services not only benefit customers but also contribute to the company’s profitability.
The Insurance Operations segment offers consumer finance protection and insurance products through the automotive dealer channel, as well as commercial insurance products directly to dealers. This segment provides vehicle service and maintenance contracts and guaranteed asset protection products and underwrites commercial insurance coverages, which primarily insure dealers’ vehicle inventory.
The Mortgage Finance Operations segment manages a consumer mortgage loan portfolio that includes bulk purchases of jumbo and low-to-moderate income mortgage loans originated by third parties and direct-to-consumer mortgage offerings.
The Corporate Finance Operations segment provides senior secured leveraged cash flow and asset-based loans to middle market companies, leveraged loans, and commercial real estate products to serve companies in the healthcare industry. The company also offers commercial banking products and services, securities brokerage, and investment advisory services.
Bank of America
The company posted mixed first quarter results, but pays a solid 2.77% dividend. Bank of America Corporation (NYSE: BAC) is a ubiquitous presence in the United States, providing:
- Various banking and financial products and services for individual consumers, small and middle market businesses, institutional investors, corporations, and governments in the United States and internationally
- operating 5,100 banking centers, 16,300 ATMs, call centers, and online and mobile banking platforms.
Bank of America has expanded into several new US markets, with scale globally positioning them ideally to benefit from accelerating loan growth over the next two years. Moreover, unlike smaller peers, scale allows the bank to substantially increase investment over the next few years without notably jeopardizing returns, driving further market share gains.
Warren Buffett owns 1,032 852,006 bank shares, 13% of the float, and 9.5% of Berkshire Hathaway’s portfolio.
Capital One Financial
This top financial stock has spent years building and maintaining a strong brand with consumers, and Warren Buffett owns 12,471,030 shares, which are 3.3% of the float. Capital One Financial Corporation (NYSE: COF) operates as the financial services holding company for the Capital One Bank (USA), National Association; and Capital One, National Association, which provides various financial products and services in the United States, Canada, and the United Kingdom.
The company operates through three segments:
- Credit Card
- Consumer Banking
- Commercial Banking
The company accepts:
- Checking accounts
- Money market deposits,
- Negotiable order of withdrawals
- Savings deposits
- Time deposits
Its loan products include:
- credit card loans,
- auto and retail banking loans,
- commercial and multifamily real estate loans, and
- commercial and industrial loans.
The company also offers credit and debit card products, online direct banking services, and treasury management and depository services.
Capital One Financial serves consumers, small businesses, and commercial clients through digital channels, branches, cafés, and other distribution channels located in:
- New York
- Louisiana
- Texas
- Maryland
- Virginia
- New Jersey
- California
Citigroup
This is a top bank that Warren Buffett bought a massive $2.5 billion worth of stock in the summer of 2022. The stock pays a dependable 3.55% dividend. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations, and governments with a broad range of financial products and services.
Citigroup offers:
- Consumer banking and credit
- Corporate and investment banking
- Securities brokerage
- Transaction services
- Wealth management services.
Citi operates and does business in more than 160 countries/ jurisdictions in North America, Latin America, Asia, Europe/Middle East and Africa (EMEA).
Trading at a reasonable 10.3 times estimated 2024 earnings, this company looks very reasonable in what remains a volatile stock market and in a sector that has dramatically lagged but looks to be gaining ground.
JPMorgan Chase
Led by Jamie Dimon this bank posted blow-out first quarter results. JP Morgan Chase & Co. (NYSE: JPM) is one of the leading global financial services firms and one of the largest banking institutions in the US, with about $2.6 trillion in assets. The company, a result of the merger between retail bank Chase Manhattan and investment bank JP Morgan.
The firm boasts a diverse range of operating divisions, including:
- Investment and corporate banking
- Asset management
- Retail financial services
- Commercial banking
- Credit cards
- Financial transaction services
This breadth of services not only demonstrates JPMorgan Chase’s adaptability but also hints at the potential for growth and expansion in various sectors of the financial services industry.
Top analysts across Wall Street are very positive about the money center and investment giant, and they cite many reasons for this. Number one is that the industry titan faces a continued broad recovery in nearly every aspect of its business.
Wells Fargo
This large-cap bank is perhaps the best solid value play for 2024, posted strong first-quarter earnings, and pays a 2.48% dividend. Wells Fargo & Company (NYSE: WFC) is a diversified financial services company, provides banking, investment, mortgage, and consumer and commercial finance products and services in the United States and internationally.
It operates through four segments:
- Consumer Banking and Lending
- Commercial Banking
- Corporate and Investment Banking
- Wealth and Investment Management
The Consumer Banking and Lending segment offers diversified financial products and services for consumers and small businesses. These include:
- Checking and savings accounts
- Credit and debit cards
- Home, auto, personal, and small business lending services
The Commercial Banking segment provides financial solutions to private, family-owned, and specific public companies. Its products and services include banking and credit products across various industry sectors and municipalities, secured lending and lease products, and treasury management services.
The Corporate and Investment Banking segment offers a suite of capital markets, banking, and financial products and services to corporate, commercial real estate, government, and institutional clients. Its products and services comprise:
- Corporate banking
- Investment banking
- Treasury management
- Commercial real estate lending and servicing
- Equity and fixed-income solutions
- Sales, trading, and research capabilities services
The Wealth and Investment Management segment provides personalized wealth management, brokerage, financial planning, lending, private banking, and trust and fiduciary products and services to affluent, high-net-worth, and ultra-high-net-worth clients.
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