If you plan on living above the poverty level in your golden years, you must learn to look beyond the headlines.
Back in 2008 and 2009 I was pounding the table for people to buy bank stocks. Yes, in the depths of the great collapse, when banks looked like they would go the way of the dinosaurs, it was as plain as the nose on your face that they would not only recover, but thrive again.
My rationale then was the same as it is now. The world cannot function (at least the business world cannot function) without them. That makes them essential and the great ones will continue to be too big to fail and can’t help but be profitable.
The headlines back then, and now, had most people believing the big banks were finished. And they couldn’t be more wrong.
While I expect more restrictions on what they can and cannot invest in, that will only make them a more stable investment, much less prone to the types of crashes we saw in 2008.
Their essential nature and better limits on what they can and cannot do with depositors’ money make the best of them suitable for any retirement portfolio.
And they don’t get any better than Wells Fargo (NYSE: WFC).
Here’s a bank that, despite the constant flow of lawsuits against big banks in 2013, has remained somewhat unscathed and business has flourished.
It reported:
- Record net income in the last quarter, up 13% year over year.
- Both its loan growth and deposits were up.
- Improving real estate pricing has allowed Wells Fargo to reduce its loan losses by $1.4 billion.
- Its stock is very reasonably valued at 13 times earnings.
There is still some bad news to come about big bank lawsuits in 2014, so this is somewhat of a contrarian play. But with a 2.6% dividend and good growth figures for the next five years, it is a solid pick in an essential business and perfect for almost any retirement portfolio.
Take a look at one of the best banks in the world, Wells Fargo.