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1) Japanese Banks have lagged the global rally
2) Why we’re buying MUFG
Incredibly Attractive Valuation
Low P/B of 0.36x despite owning 21% of Morgan Stanley (which trades at 1.35x P/B). Based on historical ROE and P/B trends for MUFG, we’re anticipating a valuation re-rating by mid 2021.
High Dividend Yield of 5.5%
At its current share price, MUFG’s dividend yield is 5.5%. MUFG did not have to cut its dividend this year and the current dividend per share is expected to be sustained in 2021.
Restart of Share Buybacks
3) Analyst Ratings for MUFG
The InvestQuest View
We see MUFG as a compelling investment given its 21% stake in Morgan Stanley, its attractive dividend yield, as well as the potential for sizeable share buybacks. MUFG has lagged the November stock market rally (where we saw a lot of global banking peers do well), so we see an opportunity for the stock to play catch up. In addition...
