Our 2 for 1 Index is right up there with the broad market indexes, recently hitting an all-time high, reports Neil Macneale, editor of 2-for-1 Stock Split Newsletter.
That said, my crystal ball is as clear now as it's ever been (not so much) and, with mighty forces pulling the market in all directions, predictions for 2021 are risky at best. The release of the Covid-19 vaccines is great news but the benefits will be slow in coming.
Meanwhile, the election of Joe Biden means huge changes are in store for the agencies that oversee the workings of the economy — but again, it will probably be a while before we feel the impact.
Among the latest stock split candidates, Stifel Financial Corp. (SF) announced a 3 for 2 split in November; however, a look at Stifel's numbers did not spark much interest. Stifel has had a very good year but, in my opinion, it has gotten ahead of itself and I'm going to take a pass for now.
One outcome of this analysis was a fresh look at the financial sector in general and the realization that there are bargains to be had in the regional banking space.
The financial sector has been close to the bottom of the rankings regarding overall sector performance this year, and quite a few regional banks in particular are trading near or below book value.
Running my 2-for-1 screens on a group of these stocks brought Washington Federal, Inc. (WAFD) into focus as a good fit for the 2 for 1 Index.
Headquartered in Seattle, Washington Federal, Inc. is the holding company for Washington Federal Bank operating 234 branches located in Washington, Oregon, Idaho, Arizona, Utah, Nevada, New Mexico, and Texas.
At the moment, WAFD is selling at below book value and with a low PE of 11.3 compared to the average PE of the nation's twenty largest banks of 21.3. WAFD pays a 3.5% dividend with a payout ratio of only 38%.
The company is solidly profitable and has no long-term debt so, without a good split to recommend, WAFD seems a safe, predictable, and cheap stock to fill in while we wait for a few good splits to come along.
The financial sector in general not yet fully recovered from the market-wide "virus slump", which is one reason we're able to acquire Washington Federal so reasonably.
