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On Friday in my Quick Pick video on YouTube (Have you subscribed yet–why not? It’s free and that way you’ll know when a new video goes up) I said I would add Truist Financial (TFC) to my Dividend Portfolio on Monday. And so I will.

My rule of thumb at the moment is to buy dividend-paying stocks when the yield breaks 4%. At the time I shot the video, Truist paid 4.1%. Thanks to Friday’s sell off and the stock’s 3.69% drop, the yield rose to 4.18%.

Why is 4% my magic number these days?

I’m worried about how many of us are going afford retirement. Those of us who have put together good sized retirement portfolios are still going to have to draw down on our accumulated capital to finance retirement. The old rule of thumb was to expect to draw down 3% of your portfolio a year–to supplement income from dividends and bonds. I think it’s now more prudent to think of a 4% annual draw down (or maybe 5%) going forward. Anything that you can put in your portfolio to produce a 4% or better yield will take some of the pressure off that draw down.

Now, you don’t want to reach for yield only to see the price of the asset you bought fall. It’s hard to see much upside in the market at the moment, but I think Truist Financial represents one of the best bets in the banking sector–at a time when bank stocks should be doing well.

Bank stocks are supposed to gain when the Federal Reserve starts to raise interest rates. Banks make money on the spread between interest rates at the short end of the market–where they raise capital–and the long end where they make loans (like mortgages where the interest rate is pegged to the 10-year Treasury in most cases.)

That hasn’t exactly worked out this year. The fear that the Fed will raise rates so aggressively that it will cause a recession has eaten into all stocks. Bank stocks are especially vulnerable, though, because the housing market is one of the first parts of the economy to feel the effect of higher interest rates (as the cost of a mortgage rises.) The other knock on the banking sector has come from rising costs, largely from higher compensation expenses. In a tight job market banks have been spending more money to keep their best people on board.

Truist Financial certainly isn’t exempt from these pressures. But it is better positioned than many banks to avoid the worst of the situation.

The company is the product of a merger between two big banks in the Southeast, Sun Trust and BB&T. It is still in the process of cutting costs post-merger with analysts projecting that the bank will see merger-related costs fall 50% in 2022 with the rest coming in 2023.

The bank also has a number of big business units including its insurance brokerage business–the fifth largest in the world by revenue–and its investment banking unit Robinson Humphrey.

I also see promise in the bank’s digital effort build on its LightStream consumer lending platform. In 2021 the bank acquired Service Finance. That added a point of sale offering to its efforts to expand its digital consumer financing business.

The shares closed at $45.95 on Friday, June 10. Morningstar calculates a fair value of $64 on the stock.