Should I Buy Barclays PLC (ADR) (BCS) or Banco Santander, S.A. (ADR) (SAN)?

These apply to the companies’ current financial years:

These figures suggest that Banco Santander, S.A. (ADR) (NYSE:SAN)’s profits will rebound this year, as the bank’s management expect bad-loan provisions to fall after last year’s 18.8 billion-euro writedown.

Barclays also expects steady improvement in earnings this year, which is expected to translate into an 11.5% increase in the bank’s full-year dividend.

Which share should I buy?
Neither bank looks outrageously cheap, and both trade on near-identical P/E ratios. Given Santander’s 10%+ dividend yield, the Spanish bank may seem like an obvious choice.

However, Santander’s high yield represents the real risk that Spain may yet be forced to leave the euro or partially default on its sovereign debt. If this happens, then Santander would suffer heavy and unpredictable losses — and for this reason, I would probably choose to buy Barclays.

The best FTSE 100 dividends?
Barclays and Santander may both be tempting income buys, but neither of these banking stocks was selected for the Motley Fool’s latest special report, “5 Shares to Retire On.”

The Fool’s team of expert analysts crunched the numbers on every share in the FTSE 100 when researching this free report, and the five companies they chose all offer high-quality, reliable dividends.

The article Should I Buy Barclays or Banco Santander? originally appeared on Fool.com is written by Roland Head.

Roland does not own shares in any of the companies mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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