Citigroup Inc. (C)

He would lump this in with Bank of America (BAC-N). The difference between the 2 is that this one has a more global presence. The balance sheet is really strong right now. They are returning cash to shareholders, and everything is moving in the right direction.

Had a nice pullback to EBV -2. Dividend yield of 1.8% which had been increased in the June quarter by 100%. Thought they would increase it again, but are probably waiting for year-end. Relative to their earnings, it is only paying out 23%. We are coming out of the financial repression and getting higher interest rates. (Analysts’ price target is $78.75.)

Given that we are going to have tighter monetary policies and a potential tax return and a lighter regulatory environment, a name like this will benefit. You can expect a very substantial shareholder capital return going forward. In June they announced a plan to repurchase $15.6 billion of shares back. Have doubled their dividend from $.16 to $.32 on a quarterly basis. This is very global which differentiates them from the other banks. Over 40% of revenues come from emerging markets. Trading at 4.97X Price to Book, which is a big discount to other names. Dividend yield of 1.7% will probably continue to move higher. (Analysts’ price target is $75.)

He would prefer Wells Fargo (WFC-N) or J.P. Morgan (JPM-N). Wells Fargo is more of a retail focused bank and has been under pressure because of some of the news items on opening of accounts. J.P. Morgan is more of a conglomerate bank of investment and retail. It is less focused on international markets, which he views as a positive.

(A Top Pick Oct 18/16. Up 47%.) With the Fed moving, and the banks repairing their balance sheets, he knew things were going to get better.

It is one of the most global banks we have. It is not his favourite bank to own. On a valuation basis there is probably upside, but these banks could easily get cut in half if we ever get a correction.

Which US bank do you like the best? This is the one she owns, so is the one she picks. The huge story on the banks is the capital return. They’ve been making a lot of money, but haven’t been able to pay it out. Capital ratios have been improving, and now they’ve been given the green light to give it back. This bank had an analysts’ day, the first one in 9 years, meaning they probably had something to say. They have pretty aggressive plans. Got rid of a lot of assets that don’t make sense, and focused on what they feel they can be really good at. Set some pretty good targets for their EPS number going out to 2019-2020. Some of that is improvements within the business. They are one of the most overcapitalized banks with the most to give back to shareholders.

He is positive on the "too big to fail banks". They’ve repealed Dodd Franks. There has already been an expansion in their balance sheet in the last quarter. Dividend yield of 1.9%, which is expected to climb. (Analysts price target is $73.)

(A Top Pick Aug 11/16. Up 45.6%.) He likes the US financials. Also the Fed has indicated that they want to keep on boosting interest rates up.

All of the US financials stand to benefit from a rising rate environment as well as a relaxed regulatory environment. This is the one he would think is more accelerated to these new environments. You should have US banks in your portfolio.

If he had to pick one US bank right now, it would be this. The stock consolidated from December through May, broke out, had a nice little pull back, and then broke out again. This is very attractive for a number of reasons. It gets you exposure to global banking. They are taking market share, because they are well capitalized. You are going to get a significant capital return by way of share buybacks and increased dividends.

Trades at a little less than BV. He likes US banks, specifically some of the money centred banks like this one and J.P. Morgan (JPM-N). They are in very good shape and have lots of capital. They can increase dividends and buy back shares. It is the right environment to own these things, and you are not paying a lot for them. (See Top Picks.)

This is really a play on the US economy and a recovery in the financial sector. They’ve done various share consolidation, and the stock has done quite well. They are finally getting their house in order. Prefers Wells Fargo (WFC-N) whose yields are higher.

2 weeks ago, this bank increased its dividend by 100%, and thinks they could double it again within the next year. Look for more dividend increases down the road. He has just had a valuation high for this company. Assets divided by shareholders’ equity is only 8X. Compare that to the Royal Bank which is 16X. They could actually double the assets on their balance sheet with their current capital. His model price is $66.84, representing no real upside, but big potential for dividend increases. Dividend yield of 1%. (Analysts’ price target is $68.)

Over the intermediate-term, rising interest rates and a lighter regulatory environment should help a name like this. There is potential for large shareholder capital return, doubling of its quarterly cash dividend and announcing a massive $6.6 billion share buyback program. These things will push financial names higher. Because this is well diversified in Latin America and Asia, it is one of the more international banks. It is the cheapest name by far, among all the large cap names. Dividend yield of 1%. (Analysts’ price target is $66.)