Markets

4 High-Yielding Financials Make Case For A Bottom

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F our financial stocks are making a case that they've hit a bottom, but how convincing a case is it?U.S. Bancorp ( USB ),PNC Financial ( PNC ),Wells Fargo ( WFC ) andNorthern Trust ( NTRS ) haven't rallied much after the market's mini flash crash in the week that ended Aug. 28. But they haven't gone down much, either. Despite weak Accumulation/Distribution Ratings, all four are trading tightly, moving sideways and holding above their Aug. 24 lows, leaving some to believe that the selling has run its course.

IBD tracks three of them in its Banks-Super Regional industry group. Wells Fargo is a member of the Banks-Money Center group.

Interest rates will start heading higher at some point, which should help profitability at banks, thanks to higher net interest margin -- the difference between interest income and the amount of interest paid out to lenders.

U.S. Bancorp pays a quarterly dividend of 25.5 cents a share, giving it an annualized dividend yield of around 2.5%. At an investor conference in mid-September, the company said that it would have to resort to cost-cutting initiatives if rates don't start rising soon.

PNC Financial pays a quarterly dividend of 51 cents a share, giving it a yield of around 2.3%. As more and more consumers embrace mobile and the Internet for banking, PNC is redesigning many of its branches with financial consultants rather than tellers, who typically help with more mundane tasks.

Wells Fargo's quarterly dividend of 37.5 cents a share gives it a yield of 2.9%. At the end of the second quarter, it was one of Warren Buffett's largest holdings.

Northern Trust's dividend of 36 cents a share results in a yield of 2.1%. In terms of overall fundamentals, Northern Trust is the standout among the four. The company shows five straight quarters of double-digit earnings growth. Sales growth has accelerated for three straight quarters.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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