Ticker: BCH, Buy below $22.
Banco De Chile is a Chilean bank and financial services company.
Why I Would Buy
- Contrarian Buy – Dislocation in Chile has led to a double whammy: the stock has crashed; additionally Chilean Peso has crashed against the US Dollar.
- Credit Rating – Banco De Chile’s credit ratings on long-term foreign currency debt was high investment grade.
- Dividend – 4% yield, payout ratio at about 60%..
- Return on Equity: BCH has earned ~10% returns on equity for most of last decade
What Could Go Wrong
- Chilean Social Unrest – Severity of Chilean social crisis is unknown. Result of the constitutional rewrite could be severe socialism, and wipe out all private investments.
- High Dividend Taxes – Chile extracts very high taxes of 35% on dividends.
Disclosure: I am long BCH, please read additional disclosures here before taking any action based on this post.