Nyse schw1/21/2024 ![]() ![]() Schwab Announces Its Fall Business Update Sep 27 2023.Investor’s Business Daily Recognizes Charles Schwab Bank as Most Trusted Bank and Charles Schwab as one of the Most Trusted Financial Services Firms in Annual Survey Sep 28 2023.Experienced Investors Point to Timeless Principles as Keys to Long-term Investing Success and Satisfaction Oct 04 2023.Schwab 401(k) Study: Gen Z Wants to Retire by 61, but Reports the Greatest Financial Stress, Savings Obstacles Oct 11 2023.Schwab Reports Third Quarter Results Oct 16 2023.Schwab Introduces Schwab Trading Powered by Ameritrade™, Setting a New Standard for the Retail Trading Experience Oct 16 2023.Schwab Stock Plan Services Expands International Capabilities, Offers Fully Featured Accounts to 18 Additional Countries Oct 18 2023.Schwab Declares Common Stock Dividend and Declares Preferred Stock Dividends Oct 19 2023.Analysts with Morgan Stanley ( NYSE:MS) assured, "We want to be very clear here… we do not believe there is a liquidity crunch facing the banking industry, and most banks in our coverage have ample access to liquidity. ![]() This doesn't mean that a bigger, better-capitalized, and more sensibly-diversified bank like Charles Schwab is in trouble. ![]() This means that bond prices are down, and that's problematic for a bond-heavy investor like SVB. SVB is heavily allocated in bonds, and as you may be aware, bond yields are up because of the Federal Reserve's aggressive interest rate hikes. This is what can happen when a bank over-leverages itself on a particular asset class. Check the chart, and you'll see the horror show that's happening now with SIVB stock. The culprit is SVB Financial Group ( NASDAQ:SIVB), a financial institution that's more commonly known as Silicon Valley Bank (SVB). However, here's the real reason SCHW stock, and banking stocks, in general, have fallen over the past couple of days. A Finra arbitration panel required Schwab to pay a $144,000 penalty for alleged “flawed investment recommendations,” but that's a minuscule amount of money for a large banking institution. There really isn't anything terrible happening with the company at the moment. So, why did SCHW stock tumble yesterday and then again today? It's important to investigate the cause of the share-price drop in order to determine whether Charles Schwab stock is toxic or a prime bargain. Here's Why SCHW Stock Fell, but You Shouldn't Panic In other words, it certainly looks like Charles Schwab beat the odds and stayed financially firm during a tough time for the U.S. In addition, the company's full-year 2022 net income grew 23% year-over-year. For instance, in the fourth quarter of 2022, Schwab's net income increased 25% year-over-year. Indeed, Charles Schwab's earnings seem intact despite the negative pressures of high inflation and interest-rate hikes. Second, Schwab has had positive earnings for a long time and hasn't had any ultra-wide EPS misses in recent memory. First of all, Charles Schwab's dividend payout ratio is 22.7%, which isn't excessive at all (for me, the alarm bells go off when the payout ratio starts to approach 50%). The answer is definitely yes, for a number of reasons. Still, cautious investors might wonder whether Schwab's dividends are sustainable. The company has been a dividend grower for at least 14 years and features a trailing dividend yield of 1.45% (and a 1.6% forward dividend yield). This is certainly a positive sign to quote Charles Schwab himself, "This dividend increase reflects the Board’s confidence in our ability to continue to grow earnings and cash flow." For one thing, income-focused folks should be glad to know that, earlier this year, Schwab declared a 14% increase in its quarterly dividend payments. There are a number of reasons why Charles Schwab should appeal to investors right now. Hence, if short-term traders choose to sell their SCHW shares, value seekers can consider picking up those same shares at a delightful discount. This isn't a speculative little bank that's likely to go out of business tomorrow or next week. Furthermore, Fortune magazine has recognized Charles Schwab as one of its 50 World's Most Admired Companies for six years in a row. ![]()
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