The stock market is on pins and needles as interest rates shoot higher, as a huge increase would be dangerous for some sectors. The Federal Reserve will begin raising rates in March and will speed up the tapering of the quantitative easing program faster than earlier expected. After a horrible consumer price index report for January, the question will remain just how much the initial rate increase will be, as well as how many will follow.
One industry that loves rising interest rates is banking. When interest rates are higher, banks make more money by taking advantage of the difference between the interest they pay to customers and the interest they earn by investing.
We screened our 24/7 Wall St. research database looking for banks stocks rated Buy that also pay the highest dividends. When you combine the positives of rising interest rates and an opening and improving economy, the banking industry could be poised for some outsized total return. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Citigroup
This top bank stock has rallied nicely off the lows but looks poised to move higher in 2022, and it still trades way below the 52-week high. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations, governments a broad range of financial products and services.
Citigroup offers services such as consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. It operates and does business in more than 160 countries and jurisdictions in North America, Latin America, Asia and elsewhere.
Trading at a still very cheap 8.98 times estimated 2022 earnings, this stock looks very reasonable in what remains a volatile stock market and in a sector that has lagged dramatically.
Citigroup stock investors receive a 3.02% dividend. Oppenheimer’s $114 price target is a Wall Street high. The consensus target price is $78.89, and shares closed trading on Thursday at $67.50.
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