The Federal Reserve rate hike in 2018 created a positive environment for investors in the financial sector and it has boosted financial stocks.
The higher the interest rate, the wider the rate spread and the bigger the profit margin for banks and credit card companies. U.S. Financials, especially Bank of America (NYSE: BAC) and Citigroup (NYSE:C) for the most part started their rally in 2016, when rates were close to the bottom. Since then, they climbed higher.
With the easy money already made and rate hikes slowing in 2019, investors may want to look outside of the U.S. and in the European markets for financial stocks to buy. Uncertainties from Brexit are artificially capping the valuations of various British banks. Even after Citi and Bank of America reinstated their dividends, various European banks pay a dividend yield that is twice their levels.
There are five U.S. banks and two European banks investors should consider buying.
JPMorgan (JPM)
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JPMorgan (NYSE:JPM) is trading in between its low and high for the year at around $105. The stock is valued at 11.7 times earnings and has a dividend yield of 3%. The beauty of JPMorgan’s business…
