Citigroup Inc (C), JPMorgan Chase & Co. (JPM) & Toronto-Dominion Bank (USA) (TD): There Are Very Different Choices in Financials

Category 1: Citigroup

Now let’s take a look at those who didn’t perform as well during the crisis, starting with Citigroup Inc (NYSE:C). Citigroup is one of the largest U.S. banks and got hit particularly hard as a result of exposure to bad assets, and needed government help to survive. As a result, Citigroup Inc (NYSE:C)’s shares got diluted to about 26% of their original stake due to the need to raise funds to repay the bailouts. Citigroup’s shares were trading for more than 10 times their current value before the crisis, when adjusted for splits.

Since then, Citigroup Inc (NYSE:C) has actually made considerable improvements to its capital levels and credit quality, and their revenues (and earnings) are much more stable. Citigroup is certainly a more risky investment in the sector than JPMorgan Chase & Co. (NYSE:JPM), but more risk means more potential for reward if things are going well. Citigroup Inc (NYSE:C) trades for 12.7 times last year’s earnings, and the company is expected to grow its earnings at a 12% annual rate going forward.

Category 2: TD Bank

On the complete opposite end of the spectrum is Toronto-Dominion Bank (USA) (NYSE:TD) Bank, known simply as TD Bank. Toronto-Dominion Bank (USA) (NYSE:TD) (which is based in Canada) has the type of business model and balance sheet that U.S. banks should strive for. In fact, during TD Bank’s worst year, 2009, the company still turned a very healthy profit.

Also worth noting is Toronto-Dominion Bank (USA) (NYSE:TD)’s dividend yield of 4% annually, which has been raised consistently and represents a payout ratio of just 40%, meaning that there is plenty of capital to cover the dividend and other operating expenses. TD Bank still looks like a bargain at just 12 times earnings and a 10% forward growth rate, especially considering its track record of responsibility and profitability.

The best move for you is…

Which bank is the best investment for you depends on your particular goals and risk levels. Citigroup Inc (NYSE:C) is a bit too risky for my taste, but could wind up paying off tremendously if it ends up performing to its expectations. The other two are rock-solid and should thrive for years to come, and it is hard to go wrong with either one.

The article There Are Very Different Choices in Financials originally appeared on Fool.com.

Matthew is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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