Banking on profits

Citigroup (NYSE: C) is a blue-chip stock on sale, with its shares recently down almost 20 percent from their 52-week highs. One of the biggest banks in the world, Citigroup has been pressured by the pandemic and fears of what it might do to Citigroup’s business. Low interest rates have also hurt its ability to generate meaningful interest income, while employee errors also cost the company.

Citigroup is soon to be under new management, though, with incoming CEO Jane Fraser — the first woman ever to lead a large Wall Street bank. It’s spending more than $1 billion to improve internal controls, and reports, “The entire management team is committed to achieving operational excellence and a best-in-class risk and control environment.” The company is also restructuring itself, and Fraser may be eyeing more global expansion.

The world’s eventual recovery from the pandemic will boost Citigroup’s business as well.

Overall, Citigroup should be a less risky stock in the future. While the next few months, even quarters, could be rocky, Citigroup should be a good long-term investment coming out of the recession. Management plans to buy back $1.8 billion in stock, and possibly much more. (Buybacks may benefit shareholders if they’re executed when shares are undervalued.) Meanwhile, patient believers can enjoy Citigroup’s dividend, which recently yielded a respectable 3.1 percent.