Please enable JavaScript to view the comments powered by Disqus.
Slide Show

1 of 9

8 Stocks to Benefit from Rising Interest Rates

Thinkstock

Donald Trump's election as president has fueled a powerful stock-market rally rooted in expectations of faster economic growth in 2017. And with faster growth is likely to come higher interest rates.

Long-term bond yields have already surged, and the Federal Reserve is likely to raise its benchmark short-term interest rate by 0.25 percentage point on December 14. That would be the first hike in 12 months. Many economists believe the Fed will boost rates twice more in 2017.

And although rising rates are bad news for some businesses, they're a boon for others—particularly banks: When the Fed raises its rate, nearly all banks immediately raise their prime lending rate, the rate (now 3.5%) that banks charge their most creditworthy customers, by the same amount. But they're far slower to lift what they pay on deposits, so they earn a wider "spread" between the rates at which they lend and the rates they pay depositors.

Banks also could gain from Trump's promise to ease financial regulation. And if the economy improves—still a big “if”—so could demand for loans, and credit quality in general.

We went hunting for banks and other companies that could benefit from rising rates and chose eight standouts.

Stocks are listed alphabetically. Prices and related figures are as of December 6. Price-earnings ratios are based on estimated earnings over the next four quarters. Average of analysts’ earnings estimates are from Zacks Research System.

View as One Page

Check Out

Kiplinger's Latest Online Broker Rankings

Advertisement