Along with the energy sector, banks have done very well in the bull market for equities.
Many articles on this site have detailed the appeal of investing in oil and natural gas stocks. That has certainly paid off for investors as natural gas was the top performing commodity in 2013. Many banks stocks such as JP Morgan (NYSE: JPM), Wells Fargo (NYSE: WFC), and U,S. Bancorp (NYSE: USB) did well, too.
Wells Fargo recently hit an all-time high.
The San Francisco-based bank is the largest holding of legendary investor Warren Buffett. Wells Fargo is up more than 33 percent for the last year of market action. It is a very profitable bank with loads of cash on its balance sheet.
Like Wells Fargo, United States Banks is a major holding of Warren Buffett. Headquartered in Minneapolis, it too has a rock solid balance sheet and is very profitable. For the last year, U. S. Bancorp has risen more than 26 percent.
Jamie Dimon, the head of JP Morgan, has long had a reputation for being a savvy banker. While JP Morgan has had its problems in recent times, the stock price is still up over 36 percent for the last year. Obviously Wall Street still has a great deal of confidence in Mr. Dimon.
What should also appeal to investors about each of these banks is the healthy dividend yield.
At present, the average dividend for a member of the Standard & Poor’s 500 Index is around 1.9%. For JP Morgan, it is almost 2.6%. U.S. Bancorp pays a dividend of 2.30%.
For long term investors, banks are an ideal holding. As demonstrated over the course of The Great Recession, national governments are committed to a health financial sector. Investing in blue chip banks like JP Morgan, Wells Fargo, and U.S. Bancorp is one way to profit from that support.