During the financial crisis of the late 2000s, most banks' and manufacturers' stocks declined precipitously. After the Dow Jones Industrial Average and S&P 500 touched all-time highs in late 2007, it took less than two years for the market to drop to its March 2009 lows. Along the way, the decline was marked by panic about an imploding economy and hand-wringing about the future of business in the developed world.
Banks like Citibank and JP Morgan were hit particularly hard by the non-performing mortgage loans that they had made during the height of the housing boom. Both companies' stocks declined to multi-decade lows. Although JP Morgan pulled out of its spin after assuring investors that it lacked "core" exposure to the mortgage loans and credit default swaps that had devastated the balance sheets of other banks, Citibank was not so lucky. For over a year, the company's stock was worth less than $4. That represented a drop of more than 90 percent from its peak in the late 2000s. The company also had to suspend its dividend in order to conserve cash.
More recently, Citibank has made some smart financial maneuvers and boosted its stock price as a result. However, its recovery has been far slower than that of other banks. In fact, many observers worry that a prolonged period of economic weakness could force Citibank to take deep losses.
In 2011, the company's stock went through a "reverse split." As a result of the split, the number of shares that each of the company's investors owned declined by a factor of 10. If an investor owned 10,000 shares, he or she would have had just 1,000 after the maneuver. At the same time, the company's share price increased by a factor of 10. From its pre-split moving average of $4.20, Citibank's stock increased to $42.20 overnight. Since it didn't affect the overall value of the company, this maneuver wasn't taxable and didn't produce any income.
As a result of the split, Citibank's stock began to pay steady dividends. These didn't amount to much. In fact, the company paid its shareholders just one cent per quarter. That translates to a dividend yield of .1 percent. Needless to say, other banks pay out far higher dividends to their shareholders. For instance, Wells Fargo and JP Morgan both sport yields of over 2 percent. It's unclear whether Citibank will follow suit anytime soon.