In a nutshell, the thing I like best about UBS among financial sector stocks is the yield. At 4.4%, it ranks among the higher yields coming from a diversified, international banking institution.

Some time ago, I spoke with a UBS financial advisor, with whom I’ve done business, who bemoaned the fact that UBS’s stock is being treated more like an investment banking firm than an asset management firm. He hopes that as the market appreciates UBS’s asset management strengths, the stock price will go up to reflect the kind of valuations that asset managers like BlackRock enjoy.

For the moment, I’m happy to take advantage of what I believe is a depressed price for UBS.

Did I jump the gun on UBS? We’ll know better when the company reports earnings on July 24. (I tend to go into new stocks in small steps, adding to my stake over time if a good investment thesis holds up.) The stock price is down 16% year-to-date, and I think it’s at an attractive buying point. (Admittedly, I’ve made the mistake of chasing stocks down before. GE is in my portfolio.)

Still, I think UBS’s prospects warrant a higher valuation than its current share price would indicate, and why not scoop it up for the 4.4% yield? For my portfolio, its international exposure is a plus. (seven of my other stocks are US based companies, and the other international stock is a Canadian firm.)

The median price target among equity analysts who cover UBS is $20. At around $15 a share, it looks like a bargain to me. European based rivals Credit Suisse and Deutsche Bank don’t offer dividend yields that rival UBS’s.

I always take a look at a stock’s short selling ratio when I’m in a buying mood. At the end of June, UBS had a pretty miniscule .4% short interest.

For a more skeptical take on UBS’s current investment appeal, see this Bloomberg article.

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