My portfolio is too heavily weighted in tech and I want to add a few bank stocks. Why bank stocks? Because I want to own something boring that will maintain its value when the bottom drops out of the market. And nothing is more boring than bank stocks! OK, maybe insurance stocks (except for LMND). Off the top of my head, here are five things I can think of that are more boring than bank stocks.
- Tom Brady’s Diet
- Anyone working out on Instagram Live
- Waiting for the bus
- Playing jacks (never understood how kids in the 50’s did it)
- The Masters music promo on CBS
What I don’t know is which bank stocks are worth owning. What do you even look for in a bank? A nice logo? Clean branches? A good trading department so they can make money doing something other than traditional banking? Here are a few bank stocks I’m considering.
JPMorgan Chase & Co. (JPM):
Price: $156.28
P/E: 17.6
Yield: 2.32%.
Reasons to Own Shares: I bank with Chase. It’s always nice to own shares of the bank you actually use. Also, they recently hired Kevin Hart to reach out to underbanked populations and help with financial literacy. There’s literally a branch on every corner and if there’s not a branch on your corner, don’t worry, they’re building one. The deep blue color of the new cards makes you feel like you’ve got more money in the bank than you actually do.
Reasons Not To Own Shares: Jamie Dimon doesn’t seem like the greatest human being. The bank, like most, has a long history of redlining and racial discrimination and though it’s trying to be more transparent, there’s still a long way to go.
Wells Fargo & Company (WFC):
Price: $40.51
P/E: 98.78
Yield: 1.00%.
Reasons to Own Shares: If you want to solidify your place in hell, you buy shares of Wells Fargo. Other than that, there is no reason to own shares of this horrid excuse for a financial institution.
Reasons Not to Own Shares: This is a company whose supervisors oversaw a plan to falsely open up fake accounts for millions of clients, without those clients’ permission, to reach ridiculously high sales goals. And it didn’t just happen for a week or two. According to the New York Times, it went on for 14 years! From 2002 to 2016 employees opened up millions of fake accounts in customers’ names and forged signatures for products like new credit cards. How anyone could bank with Wells Fargo after that is beyond me. It’s like marrying a thief and being shocked when the jewelry comes up missing. Call me old fashioned, but the first thing I look for in a bank is a bank that doesn’t cheat me out of my money. There is no second thing.
U.S. Bancorp (USB):
Price: $57.01
P/E: 18.72
Yield: 2.96%
Reasons to Own Shares: It’s a lot less expensive than JP Morgan and the yield is a little higher.
Reasons Not to Own Shares: Do they even have physical branches? I’m 50 years old and I can honestly say I’ve never heard anyone say, “Honey, I’ll be right back. I have to stop at U.S. Bancorp.” Does this place really even exist or is it one of those theoretical banks?
Bank of America Corporation (BAC):
Price: $39.99
P/E: 21.39
Yield: 1.81%
Reasons to Own Shares: The least expensive of the big name banks, if they made it through the 2008 financial crisis without going under, there’s a good chance they’ll be around for the rest of our lifetime. Plus, their stock is priced the lowest of the major banks even if there’s probably a good reason for it.
Reasons Not to Own Shares: No one likes Bank of America. I’ve yet to meet a single person that actually liked banking there. It seems they’ve built an entire business around the fact that people are generally too lazy to leave their bank. Not exactly a great business model.
Bank of Hawaii Corporation (BOH):
Price: $90.75
P/E: 23.51
Yield: 2.98%
Reasons to Own Shares: Everything in Hawaii is better. I imagine the Board of Directors meet in one of those glorious open air hotel lobbies overlooking the ocean where the talking parrots say “APR” and “APY” all day long.
Reasons Not to Own Shares: I can’t think of any.
The Goldman Sachs Group, Inc (GS):
Price: $330.81
P/E: 13.37
Yield: 1.51%
Reasons to Own Shares: Goldman technically became a bank in 2008 but they make their money in a variety of ways including investment banking, financial services, securities underwriting and trading. Though expensive at $330/share, the stock has the lowest P/E ratio of any of the banks on this list and more ways to generate profit than all of them.
Reasons Not to Own Shares: They make their first years work really, really hard.
SVB Financial Group (SIVB):
Price: $497.69
P/E: 21.76
Yield: Nope
Reasons to Own Shares: The bank of Silicon Valley has a growth chart that mirrors many of the companies it’s worked with over the last decade. Consider that the stock traded at $43 a decade ago. And while it may already have undergone its major growth spurt, at a P/E of 21 it’s not too overpriced.
I’m sure I’m missing a few others. If you have a reliable bank stock worth investing in, please add it to the comments so others can see. And now, without further ado, let the banking begin.
2 responses to “Is Anything More Boring Than Buying A Bank Stock?”
US Bank is one of the largest banks in the country and if you come to Chicago, we can visit any one of several in my neighborhood.
Thanks for the take on Wells Fargo. I had to refinance my mortgage and cancel a credit card just so I didn’t deal with those cheats. Can’t believe anybody still has an account with them (not to mention that nobody went to jail).