Citigroup: A High Dividend Stock One Analyst Is Recommending

Citigroup is one of the high dividend stocks I own and it has been beaten up lately due to some sub-prime mortgage crisis. However, one analyst is recommending Citi to investors based on the company's enormous earnings power:

Punk Ziegel & Co. analyst Richard Bove said Wednesday investors should buy shares of Citigroup Inc., based on the company's strong cash flow and international growth opportunities.

"The earnings power of Citigroup is not being recognized in the current price of this stock," Bove wrote in a research note.

Citigroup (C, Fortune 500) shares rose 21 cents to $29.65 in premarket trading. Shares of Citigroup closed Monday at $29.44, 47 percent below the $55.55 price at the beginning of the year.

Bove said, despite weakening credit markets that have cost the banks billions of dollars in mortgage writedowns, Citigroup still provides value because of its geographic and product diversity. Acquisitions in Japan and investments in China should help bolster Citigroup's Asian operations, Bove said.

Bove also said he does not believe Citigroup needs to cut its dividend to retain cash and improve capital ratios. Instead, Bove recommends the banks reduce assets if it needs to bolster capital ratios.

As with all high dividend stocks, an investor needs to be careful to ensure they believe in the fundamentals of the stock. It is not enough just to have a high dividend - it must have a strong business behind it. This analyst seems to think that Citigroup has it.