Is Citigroup Stock a Buy Now?

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As a finance enthusiast, I can’t help but admire the stature of Citigroup (C) in the U.S. financial landscape, holding its own against titans like Bank of America (BAC). However, this fact alone doesn’t necessarily make Citigroup a stock to invest in. Let’s delve into whether this banking behemoth is worth adding to your portfolio or if it’s better left untouched.

What does Citigroup do?

Essentially, Citigroup primarily focuses on traditional banking services, catering to both individual customers and businesses. This includes providing savings and checking accounts, mortgage loans, and business loans, which are common offerings among banks. They face competition not only from local banks but also larger players such as Bank of America in these areas. Traditional banking is a highly competitive industry. What gives Citigroup an edge over smaller competitors is its extensive global reach, with branches across the U.S. and internationally. Yet, even this advantage may not be enough to distinguish it from powerhouses like Bank of America.

Beyond its primary focus on retail banking, Citigroup also delves into capital markets, investment banking, and wealth management. As a result, it boasts a broad range of services. However, this diversification is common among large banking competitors. If you’re considering investing in a big bank, Citigroup could be a suitable choice, but that doesn’t necessarily make it the best one for your investment.

Citigroup’s uneven dividend story

In simpler terms, on average, bank stocks provide a return through dividends of around 2.6%. Interestingly, both Citigroup and the general group of banks offer this same rate of 2.6%. However, Bank of America’s yield is slightly lower at 2.2%. If your focus is solely on maximizing the return from these investments (dividend yield), neither Citigroup nor the average bank stands out significantly. But it’s worth noting that Citigroup has a higher dividend yield compared to some of its larger counterparts in the industry.

If you’re a cautious investor focusing on dividends, the dividend record presented might raise some concerns, given Citibank’s history during the 2007-2009 Great Recession. In this period, Citibank required a government bailout and reduced its dividend payments. It’s important to note that many large U.S. banks faced similar challenges, with Bank of America being one of them. However, it’s worth mentioning that not all financial institutions experienced such difficulties.

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Significantly, banks such as the Toronto-Dominion Bank (TD) in Canada and United Bankshares (UBSI) in the U.S., have managed to maintain their dividends without reduction. In fact, United Bankshares has achieved ‘Dividend King’ status, boasting over 50 consecutive years of increased dividends. For your information, United Bankshares currently offers a dividend yield of approximately 4%, while TD Bank yields around 4.1%. If you prioritize consistent dividends and income generation, either of these banks might be a more suitable choice for you compared to Citigroup.

Valuation is another problem for Citigroup

After recovering significantly since the Great Recession, Citigroup’s business is once again flourishing and its dividend growth has resumed. However, potential investors should be aware that the stock price isn’t currently undervalued. The price-to-sales, price-to-earnings, and price-to-book ratios are all higher than their averages over the past five years. In summary, while Citigroup is doing well, it doesn’t seem to offer a compelling bargain compared to other banks in the industry.

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2025-07-22 12:36