3 Reasons To Go Long In Warren Buffett's Favorite Bank
While legendary investor Warren Buffett owns financial stocks stocks as Goldman Sachs (NYSE: GS), American Express (NYSE: AXP), Bank of America (NYSE: BAC), and U.S. Bancorp (NYSE: USB), Wells Fargo (NYSE: WFC) is his largest position in that sector.
Unsurprisingly, given the relative size of Buffett’s position, Wells Fargo is a superior stock to the other financial stocks in Buffett’s Berkshire Hathaway (NYSE: BRK-A) portfolio.
Big Profits, High Yield, Good Beta
Wells Fargo has a stunning profit margin of over 40 percent. For Bank of America, it is just above 13 percent. American Express has a profit margin of 15.50 percent. Better still, Wells Fargo shares those profits with shareholders.
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Wells Fargo has a dividend yield of 2.69 percent. The dividend yield for Goldman Sachs is only 1.27 percent. U.S. Bancorp has a dividend yield of 2.33 percent. Wells Fargo also has a history of dividend growth that rewards long term shareholders.
Suiting Buffett’s style of investing, Wells Fargo is a stock to buy for the long term. It is well positioned to grow with the American economy as America comes out of The Great Recession. The beta is above average, so there is the opportunity to buy on the dips, which increases the dividend yield and enhance the long term overall return.
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