Since the end of the global financial crisis, WBK has steadily increased its revenues and dividends (including paying two special dividends in 2013), impressively increased return on equity to 16.4 percent, and raised its capital ratio sufficiently to protect its portfolio in case of another financial meltdown. Conservative analysts believe that WBK could trade at the $28-$30 level in the coming 12 months. That wouldn’t be enough to knock your socks off, but it would produce a respectable total return of 24 percent. Perhaps that’s why Morgan Stanley, UBS, the Royal Bank of Canada, Northern Trust, Invesco, Bank of America, Deutsche Bank and Bank of New York own WBK shares. And perhaps you should, too.
Iceland’s money market accounts do pay 4.25 percent. Last year, they paid 5.75 percent. It’s liquid as ice water, and some Americans have taken the plunge. However, you must first convert your U.S. dollars to Icelandic kronur. Today’s rate is about 105 kronur to the U.S. dollar, and there’s the risk. If the krona were to remain at 105 per dollar or if it were to rise in value against the U.S. dollar, an investor would come out smelling like a red Icelandic rose. But if the krona were to fall (and it has), an investor could lose his booties and get frostbite. A trip there is preferable to an investment, and if you visit, try the blood pudding.
Malcolm Berko addresses questions about stocks. Reach him at P.O. Box 8303, Largo, FL 33775 or mjberko@yahoo.com.