Buy Barclays Before The Dividends Are Reinstated

Seeking AlphaDividend Ideas | Financials  | United KingdomBuy Barclays Before The Dividends Are ReinstatedDec. 7, 2020 10:55 AM ET|| About: Barclays PLC (BCS), Includes: BAC, C, JPM, WFCby: IP Banking ResearchIP Banking Research Deep Value, Banks, Tech, large-capSummaryI have been pounding the table on Barclays in the last couple of months.
The stock has catapulted higher in recent weeks.
However, it is still trading at distressed valuations.
The next catalyst is Barclays' coming of age as a dividend growth stock.
In spite of the recent run-up, there is still a potential 50 percent gain in the next 12 months.
I have been pounding the table on Barclays (BCS) in the last couple of months given its, undeservedly so, distressed valuation. In my most recent article, "Barclays: Deep Value With Near-Term Catalysts", I articulated the key near-term drivers for the stock and since then, BCS has significantly outperformed the S&P 500 and other large banks.

BCS also outperformed the large U.S. banks since the nadir of this crisis occurring on the 23rd March 2020. As noted in my July article, Barclays was my preferred pick over the U.S. banks.
Data by YChartsStill, in spite of recent sharp outperformance, the valuation gap between Barclays and the U.S. banks remains too wide in my view:
Data by YChartsBCS is trading at a mere 0.45x tangible book. I fully expect it to deliver RoTCE of between 8 to 9 percent on a normalized basis, which suggests there remains a material upside. A conservative fair value for Barclays should be ~0.7x tangible book and that equates to a greater than 50 percent upside in the next 12 months.
But in this article, I would like to focus on BCS's attractiveness for dividend growth investors ("DGI"). Even though, this may seem like a misnomer as BCS doesn't currently pay dividends.
The thesis
BCS currently does not pay dividends.
The Bank of England ("BoE"), in the wake of this crisis and out of... Read more