We need to consider that historically Wells Fargo has grown quickly via two main methods. The company serves over 70 million customers through its network of more than 8,300 store locations and 13,000 ATMs, as well as its website and mobile banking application.Meanwhile, Wells Fargo was able to grow quickly, thanks to rapid industry consolidation over the past few decades. That’s despite rising interest rates that have fueled slow but steady net interest margin gains at rival banks.Wells Fargo expects the action will reduce its profits by $300 million to $400 million in 2018 (compared to more than $20 billion in net income) but is confident it will satisfy the requirements of the consent order it agreed to with the Fed. In fact, Wells Fargo now serves about one in three households in the U.S., and its convenience and brand recognition are two reasons why it has enjoyed such strong deposit growth.Part of this might come from a loss of reputation as well, leading to less customer loyalty. First, U.S. banks aren’t allowed to return cash to shareholders (via buybacks and dividends) without first undergoing an annual stress test and submitting a Comprehensive Capital Analysis and Review, or CCAR, to the Fed each year.However, because of Wells Fargo’s loan mix (more heavily skewed towards fixed rate mortgages), Wells Fargo’s net interest margin spread hasn’t been growing in recent years. Wells Fargo’s rating was below the average for regional banks, as well as below that of JPMorgan and Bank of America (BAC).According to Wells Fargo’s annual reports, the company’s total deposits have grown from $3.7 billion in 1966 to $1.3 trillion in 2017, representing approximately 12% annual growth over that period. There is no talk of bank bailouts this time around.Investors have focused on a rise in record prices for gold, but silver’s up nearly 25% in July—the metal’s second-biggest monthly gain on record—and it’s still undervalued compared with the yellow metal.Scroll the table to see all of the data.That points not only to loan forbearances and credit losses, but also to continued pain for countless businesses of all sizes that owe money to the banks.The analysts wrote that “Wells Fargo’s issues appear self-isolated,” as the bank continues to operate under strict regulatory supervision in the wake of several customer-service scandals. As borrowers, consumers and businesses are most concerned with getting access to dependable financing at the lowest interest rate possible.Despite Wells Fargo’s impressive past track record, the bank has recently fallen from grace, and in a big way.Given the continued improvements at its rivals, most notably JPMorgan Chase and Bank of America, it is looking increasingly possible that Wells Fargo might no longer be the best large bank in America. In 2017, Wells Fargo’s payout ratio was 38%, significantly higher than the Fed’s target. WFC's next quarterly dividend payment will be made to shareholders of record on Tuesday, September 1. When discussing Wells Fargo's Unsafe Dividend Safety Score in May, we raised concerns about the bank's dividend coverage: Wells Fargo could be in a particularly tough spot due to its asset cap (harder to generate more income when you can't lend more and fees are being reduced to help distressed customers) and potential need to substantially increase its provision for credit losses. Wells Fargo’s deposits have continued growing at a healthy mid to high-single digit rate in recent years as well.The Fed’s actions are not expected to affect the bank’s financial condition, and Wells Fargo’s dividend should remain safe.
The first was through aggressive industry consolidation of smaller regional banks, including:As a result, Wells Fargo’s revenues are potentially going to have a hard time growing, at least until the Federal Reserve’s cease and desist order is lifted. That’s thanks to a growing number of self-inflicted wounds and rising growth risks that hamstring its competitiveness with its large and increasingly impressive rivals.The Fed has just released 2018’s stress test scenario, and it’s much more conservative than in past years. Even with tax cuts benefiting its bottom line in 2018, the company’s payout ratio will remain above 30%.The stress test is something the Fed puts the country’s largest and most strategically important (“too big to fail”) banks through. Fortunately, the bank has said it plans to cut costs by $4 billion in 2018 and 2019. We ran the stock through Simply Safe Dividends, and as we go to press, its Dividend Safety Score is 79. Dividend Safety Scores range from 0 to 100. Wells Fargo’s quarterly dividend is 51 cents a share, for a yield of 9.10%, based on the stock’s closing price of $22.42 on May 13.
View Wells Fargo historical quotes, dividends, and splits.
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wells fargo dividend safety score