The recent economic downturn has been enough to curb investment activity for some investors, while others are looking for low-risk options to continue building their portfolios. JP Morgan stock has been on the buy now list, then downgraded to a neutral advisory by some experts on investing. Stocks go up and down with market trends but is JPM Stock a solid long-term investment? We look at the advantages and disadvantages and the factors that make JPM stock an option for long-term investors.
Advantages of JPM Stock for investors
JPMorgan has a lot to offer long-term investors when you look at its history and current status. Its performance record is consistent. It's a big bank stock that represents a low risk, based on past and current performance. Its size and posturing as a leader in the market give JPM stock attractiveness for those hesitant to add to their portfolios at this juncture. The Motley Fool points out that JPM is a longstanding financial institution, established and brimming with liquidity that positions it to withstand unstable economic times, specifically large downturns in the market. It's tried and true with a stable history that means a lot to investors on the fence.
Historical data for JP Morgan
JP Morgan continues to maintain its leadership in the market and performance as a banking and financial services institution. When we look back over the past decade and a half, we can see that JP Morgan has maintained a consistent increase in annual earnings with steady growth, even during times of downturn. It's leveraged resources to maintain this behavior more consistently than most mega institutions. It's in part because of its diversity with multiple revenue streams. JP Morgan is stable and pays exceptional quarterly dividends with increases annually that have been posted over the past 8 years running with third-quarter stocks delivering a surprise with better earnings than analysts predicted, according to Investors.com.
Positive change coming
The Federal Reserve plans to create a greater flow of funds into the economy. Maintenance of low-interest rates to spur further economic activity, followed by tapering bond purchases may open up an avenue for raising rates to increase profits on loans. When this happens, investors will get a bump. This suggests that JP Morgan stock is a solid investment option with low risk at this point.
Is now the time to buy JP Morgan stock?
Mixed messages about their ratings on whether to buy stock, hold or sell come from analysts recently. With JP Morgan, it's usually a good idea to hold on to the JPM stock as a long-term investment. Some suggest that the best time to buy the stock is when it dips. US News Money reports that they predict JP Morgan stock to rise in price over the next year. This suggests that now might be the best time to buy the stock before the prices go up. JPM pays healthy dividends which are appealing to investors. The consistent increase in dividend payments is another factor that makes investors more comfortable adding JPM stock to their portfolios.
The potential downside of JPM stock
One analyst points out that it's difficult to evaluate JP Morgan's stock. The economic times are unstable. Any investment represents a risk for investors. Current lower interest rates, and nothing definite to determine when rates may rise, the future, at least in the short-term, is unknown. Mortgages bring in higher interest rates than investor dividends pay, and with interest rates so low currently, you're gambling that the rates will rise. On the more positive side, we know that the low-interest rates cannot sustain the current low rate forever.
What is the current recommendation for JPM stock?
Seeking Alpha has shifted gears taking their recommendation to buy JPM stock now to a neutral opinion after shares hit an all-time high at $155.12. They expect the price of the stock to continue to rise. Some analysts now take a neutral stance as the stock hits cyclical highs and lows with a flat, tangible book value. However, they point out that JPM stock is resilient and continues to grow with a dividend yield of 2.3 percent. Recommendations have gone up and downshifting from buy to neutral on the matter with Investor place, suggesting that the best time to buy JPM stock is when it is in a dip. Since it outperforms government bonds, it's a stock that is recommended over many other long-term investment options with low risk. With so many experts on investing weighing in, we have ample information to draw our conclusions about JPM stock as a solid long-term investment, which is a definite yes.
JP Morgan stock has a long track record for outperforming other mega financial institutions, particularly during times of economic stability and downturns in the market. It's always a roll of the dice when making any investment. JPM has an 8 year run of consistently rising dividends paid quarterly to investors with consistency. Historically, the bank has shown itself to be a leader in the industry with diverse holdings and ample liquidity. It's a giant in the financial services and banking sector and has plenty of revenue streams to keep it balanced and on solid ground. JP Morgan stock represents a solid long-term investment option for new and seasoned investors who wish to add to their portfolios with stock that will continue to rise, with a stable leader in the marketplace. The returns are not astronomical, as you might see with a more aggressive strategy that also brings with it a higher risk of loss. For those who wish to invest in a low-risk and stable stock option in the financial industry, JP Morgan remains one of the better options. Shifts from buy to neutral have been ongoing, with the best time to buy when the stock price takes a dip.
Written by Allen Lee
Read more posts by Allen Lee