How to Buy Citigroup Stock for Beginners

Citigroup is a multinational bank and financial service company that offers a wide range of services. It is headquartered in New York and was started in 1998 when banking giant Citicorp merged with financial corporation Travelers Group.

The company is incorporated in the New York Stock Exchange (NYSE) and owns Citicorp and several other local and international subsidiaries.

Citigroup is considered the third-largest bank in the US competing with JPMorgan, Wells Fargo, and Bank of America. It is on the list of the most prominent and most stable financial institutions in the world – considered to be too big to fail. In terms of the number of countries it operates and the customer base, it is one of the largest banks in the world.

In this article, we review three top online brokerages where you can buy and sell Citi stock and give you a step by step guide on how to buy Citi Stocks.

3 Quick Steps to Buy Citigroup Stock

Want to buy Citi Stocks right away? Follow this 3-step guide:

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Where to Buy Citigroup Stock?

Before you can buy Citigroup stocks, you should first have an account with a licensed and regulated stock broker.

Below is a review of our highest recommended brokers.

Provider Detailed Overview

How to Buy Citigroup Stock from eToro

eToro is one of the best stock trading platforms that you will allow you to easily buy Citigroup stocks.

Assuming that you have already created an account, verified your identity and made your first deposit, below are the necessary steps you need to take to buy Citigroup stock from eToro.

Step 1: Search for Citigroup stocks

 

You can use eToro search bar to search for Citigroup stocks. When you type the market symbol or company name, the relevant results will appear automatically.

Apart from the price chart, you will also get important information about the stock such as the company’s income statement, balance sheet and other research tools. This will enable you to make an informed decision of whether to buy or short the stock.

Step 2: Click on ‘Trade’

You will now need to click on the ‘Trade’ button, which will then create your order form.

Step 3: Buy Citigroup Stock

After funding your eToro account and searching for Citigroup stock, you can make a buy order for any amount of Citigroup stock you want to purchase.

Click the ‘Open Trade’ button to place specific details of your buy order. A new window will pop up wherein you can tweak the parameters of your buy order.

Why Invest in Citigroup?

Earnings Per Share Growth

Many investors are looking for investment options that can generate consistent cash flow. One of the things they do is buying stocks that offer dividends, which pertain to the distribution of the company’s earnings to shareholders. A lot of studies have shown that dividends make up a big part of long-term returns.

In the first quarter of 2020, the Citigroup stock price has changed significantly. At the moment, the company is paying a dividend of $0.51 per share. The dividend yield is 5.15%, which is higher than the rates offered by equally prominent players in the industry.

In terms of dividend growth, the current annualized dividend is set at $2.04, which is a 6.3% increase from last year.  The company has increased its dividend 5 times on a year-on-year (YOY) basis in the last five years. The continuity of this trajectory will mainly depend on its earnings growth and payout ratio. In the 2020 fiscal year, Citigroup is expecting substantial earnings growth.

Growth in Core Business

The company has been taking steps to reduce its expenses and streamline operations in a bid to improve its profit margins. Recently, it is reducing teh number of branches and shifting to digital and embracing digital banking.

Undervalued Stock

The company has a P/B ratio of 0.78x against the industry’s average of 1.37x. Looking at this ratio, it seems like the Citigroup stock is undervalued. This makes it an ideal option for both short-term and long-term investors.

Committed to Rewarding Shareholders

The company has a reliable repurchase program. This, coupled with its increased dividend, is an indication that the company has good capital strength and is committed to rewarding its shareholders.

Excellent Expense Management

In the last four years, the company has been able to successfully reduce expenses at a compound annual growth rate (CAGR) of 9.2%. Cost management measures such as reducing legacy assets and closing some of the physical branches will lead to bottom-line growth in the long-run.

About Citigroup Stock

Citigroup Company Background

To get a full overview of Citigroup, we will look at the histories of both the Citicorp and Travelers Group companies that merged to form Citigroup.

Citicorp

Citicorp roots can be traced back to June 16, 1812 when City Bank of New York was chartered with a $2 million capital. The bank started its operations on September 14 of the same year to serve a group of New York merchants. Samuel Osgood was elected as the first president of the bank. After joining the US national banking system in 1865, the bank changed its name to The National City Bank of New York. By 1895, it was the largest bank in the US. In 1914, it opened its first overseas branch in Bueno Aires.

The acquisition of the International Banking Corporation in 1918 enabled it to become the first American bank to exceed the $1 billion mark in terms of assets. By 1929, it was the biggest commercial bank in the world. As it continued to grow, the bank became an innovator of various financial services such as compound interest on savings, unsecured personal loans, and negotiable certificates of deposit, etc.

In 1955, the bank’s name was changed to The First National City Bank of New York, which was later shortened to First National City Bank. The bank started the credit card sector by introducing the ‘everything card’ system that later became MasterCard. It reorganized its operations into a single bank holding company to become the First National City Corporation and formally to ‘Citicorp’ in 1974. The First National Bank then changed to Citibank, which launched Citicard and started 24-hour ATMs.

Travelers Group

At the time of the merger, Travelers Group was a company with diverse financial interests organized by Sandy Weill. It can be traced back to 1986 when Weill bought the commercial Credit Division of Control Data Corporation. It was a small division that was rejected by the parent company. However, through cost-cutting and motivating employees, Weill rebuilt the company and merged it with Primerica. Through the process, he also acquired a securities firm, Smith Barney. The new company adopted the name Primerica and acquired Travelers Insurance and Shearson. Later, the company changed its name to Travelers Group.

The merger between the Citicorp and Travelers Group was announced to the world on April 6, 1988, creating a $140 billion firm with close to $700 billion assets. In this deal, Travelers Group got all Citicorp shares for $70 billion. Also, shareholders from both companies owned about half of the new firm. It maintained the ‘Citi’ brand name and the distinctive Traveler’s Group red umbrella as the corporate logo. Also, the chairmen of both companies became co-chairs and co-CEOs.

Citigroup Stock

The NYSE symbol of Citigroup stock is C.

The last time Citigroup experienced a decline in its earnings was in 2016. Ever since then, its overall earnings per year, as well as Citigroup’s stock price, have only gone up.

From 2017 to 2018, its earnings grew by 25%. The earnings growth slightly slowed down in 2019, gaining only 20%. In 2020, Citigroup’s earnings growth is projected to increase by a mere 5%.

The annualized dividend for Citigroup stock in 2019 was $2.04 per share, which is 6.3% higher than the dividend it paid in 2018.

During the first quarter of 2020, the highest price of Citigroup stock was $81.91.

What Else Should I Know About Citigroup?

Should I Buy Citigroup Stock?

In 2019, Citigroup showed solid earnings growth. However, due to the US-China trade war affecting the global market, some investors may have reservations about investing in the Citigroup stock. But should you?

Citigroup stock has a composite rating of 50, with a strong EPS rating of 91. According to Investor’s Business Daily (IBD), investors should consider stocks with a composite score above 80. This makes Citigroup stock worth adding to your portfolio. Also, Citigroup is a formidable financial institution with diversified business interests.

Based on these, we can conclude that is highly recommended to buy Citigroup stocks.

Right now, Citigroup stock is nowhere near the pre-2008 crisis. The company has argued that it can anticipate global changes for its clients since it has more businesses concentrated outside the US than most of its rivals. However, it also means that it is more susceptible to frictions abroad. Furthermore, just like other big financial institutions in the US, its profitability is affected when the Federal Reserve cuts interest rates.

A good stock is the one that can maintain consistent earnings growth. The last time the company’s earnings growth slightly dropped was in 2016. Up to now, the company has been keeping a positive earnings growth. In 2018, Citigroup’s earnings grew by 25%. However, due to challenges such as the China-US trade war, the earnings growth declined to 20% in 2019. Still, the company is expected to increase its earnings growth by 5% in 2020.

The 2019 third-quarter results showed earnings per share growth but lower overall revenues. Fortunately, its return on common equity was 12.2%. This was more than the company’s projection of 12%. Also, the company’s fourth-quarter results surpassed its expectations.

Additionally, reorganization efforts have always been proven fruitful and could also swing future revenue and earnings growth. For instance, in 2018, the company revamped its entire retail bank business and concentrated more on the credit-card sector. Allegedly, the company is also fusing its capital markets division with the investment banking business.

Conclusion

Citigroup is the third-largest financial institution in the US and a major player in the global financial industry. If you are looking for new stocks to invest in, then Citigroup stocks should be part of your list.

Once you’re ready to buy Citigroup stocks, make sure to use one of our recommended stock brokers above so you can enjoy a smooth and secure stock trading experience.

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