Started a small position todayBased on a reading yesterday...just ahead of ex dividend date on Friday.
dyodd
glta
Well, bank funding costs have remained elevated, I think, for longer than people expected because the Fed has kept those short-term rates much higher over the course of this year than what people were necessarily expecting coming into the year. And looking at the banks, I think there’s still a lot of concern about the increase that we’re seeing in write-offs and defaults.
But, in our view, they’ve really just been rising up to much more normalized historical levels after having been low during the pandemic. So, U.S. Bancorp has long been one of our banks among the US regionals. Now, again, it’s no longer anywhere near its lows. That hit last year after the Silicon Valley Bank bankruptcy, but it’s still a 4-star-rated stock at a 25% discount, 5% dividend yield.
It’s a company we rate with a wide economic moat. In fact, I think it’s the only regional bank that we rate with a wide moat, and it has a Medium Uncertainty as well. So again, there could be some near-term choppiness among banks until the Fed starts to cut rates this fall. And I think the market needs to get more comfortable that while default rates increase we’re not expecting them to surge that much higher.
I think this is an attractive, solid pick in order to play those short-term rates coming down.