With a rise in rates, brokerage firms are expected to engage in more investment activity. Notably, brokerage firms earn interest income on un-invested cash in customer accounts. The rise in rates will thus enable the brokerage firms to invest at higher rates. Further, asset managers can position themselves favorably with the rise in rates. In the fixed income sector, default rates are likely to plummet and higher interest rates will allow reinvestment at higher yields, which will eventually boost portfolio returns. The benefit can be attained by positioning fixed income portfolios strategically through proper management of duration, diversification of sources of yield and maximize the reinvestment of income.
Keeping the above factors in mind, with the help of the Zacks Stock Screener, we have zeroed-in on five stocks from the finance sector with a dividend yield of 2.5% or more and a Zacks Rank #1 (Strong Buy) or 2 (Buy). Here's a look at five companies that are currently well positioned to gain from a rate hike: Cincinnati Financial Corp. (CINF), Woori Bank Co., Ltd. (WF), Chemical Financial Corporation (CHFC), BOK Financial Corporation (BOKF) and Aflac Incorporated (AFL).
Source: Zacks
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