The prospect of rising interest rates has put downward pressure on most sectors of the U.S. stock market. But financials and insurance companies, in particular, stand to benefit from a rising interest-rate environment. As the global economy enters into a more chaotic period, insurance providers with diversified business models and available liquidity could provide solid investment opportunities.
Although well-run financial companies don’t need rising interest rates to prop up their profits, the shift to a tighter monetary regime doesn’t hurt. As rates continue to rise, insurance companies can expect to see an increase in non-GAAP pre-tax earnings, albeit not as dramatically as other financial service providers.
Our insurance pick is not only benefiting from dramatic changes in the macro-environment, but its underlying business is also improving. Its correlation to small businesses, due to its client base, is also a tailwind as more companies rebound following the COVID-19-induced restrictions of the past two years. Our pick has set its next ex-dividend payment for Wednesday, June 1.
You can check out the Best Financials Sector Dividend Stocks List.
