Catching the dip #3 – Wells Fargo (WFC)

Bought 20 shares of Wells Fargo (WFC) for 30,6$/share. Total cost – 567 EUR (621$) Annual post-tax dividend inome – 26 EUR. Yield on cost – 4,6%.

imagesLooks like my past two purchases of most declined positions BP and BPY sucesfully rebounded. This time I tought to do some diversification and go into sector that I lack in my portfolio: Technology (CSCO), Industrial (MMM), Financials (WFC). As you guess it I went for the bank. Main reason – big ass yield of 4,6% (post-tax). CSCO had only 2,5% and MMM 2,8% so almost half lower. P/E is not the best ratio today but WFC had major advantage here as well – 8 vs. 16 and 18 so WFC has some major underevaluation. Yes there is more risk as financial sector is very exposed to economy reccesion, but this time banks should do ok. With equity around 10% this bank should do ok.

Baltic_horizon_logoOn top I done a small purchase of Baltic horizon fund. Added 200 units for 1 EUR / unit and paid 202 EUR If dividends will remained unchanged (very unlikely) i will get additional 18 EUR annual income with annual income with yield close to 9%.

These two purchases has made my forward annual dividend income just  an inch from 1 kEUR mark – 970 EUR.

4 thoughts on “Catching the dip #3 – Wells Fargo (WFC)

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  1. Do you think it is sensible to count your annual dividends according to the past results, considering current dividing cuts?

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  2. For me as dividend growth investor WFC looks quite risky as their Free Cash Payout Ratio for last year is over 120%, so if situation will not change (I doubt that having in mind current market situation), dividends have pretty high risk to be cut.

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    1. Yes this is risky, but whole financial sector looks risky now. WFC looks most undervslued compared to other major banks. I went form WFC for diversification. Yes dividends may be cut, but it will rebound in some time.

      Like

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