The personal consumption expenditures (PCE) inflation data on Friday was not what the market wanted to hear. The big selling that followed the higher than expected number could be just the beginning of what may be a steep downturn in the market following a long bear market rally. The PCE price index is known for capturing inflation (or deflation) across a wide range of consumer expenses and reflecting changes in consumer behavior. Analysts were looking for an increase of 4.9% year over year, and many were stunned when the 5.4% print hit the tape.
That does not bode well for some stocks, like utilities and some real estate investment trusts. For financials, though, it means one thing: increased net-interest-income earnings. Net interest income is a financial performance measure that reflects the difference between the revenue generated from a bank’s interest-bearing assets and the expenses associated with paying on its interest-bearing liabilities. And that can earn interest for banks ranging from mortgages to auto, personal and commercial real estate loans.
Banks are not the only companies that benefit. So do insurance companies, some retailers that provide their own credit cards, corporations with very low balance sheet debt, and others that can do very well when rates go higher. The following seven Buy-rated dividend stocks look like very solid ideas. However, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
The bank with no buildings is poised to have a strong 2023. Ally Financial Inc. (NYSE: ALLY) is a digital financial services company that provides various digital financial products and services to consumer, commercial and corporate customers primarily in the United States and Canada. It was formerly known as GMAC and changed its name in May 2010.
Its Automotive Finance Operations segment offers automotive financing services, including providing retail installment sales contracts, loans and operating leases, term loans to dealers, financing dealer floor plans and other lines of credit to dealers, warehouse lines to automotive retailers and fleet financing. It also provides financing services to companies and municipalities for the purchase or lease of vehicles and vehicle-remarketing services.
The Insurance Operations segment offers consumer finance protection and insurance products through the automotive dealer channel and commercial insurance products directly to dealers. This segment provides vehicle service and maintenance contracts and guaranteed asset protection products, and it underwrites commercial insurance coverages, which primarily insure dealers’ vehicle inventory.
The Mortgage Finance Operations segment manages consumer mortgage loan portfolio that includes bulk purchases of jumbo and low-to-moderate income mortgage loans originated by third parties, as well as direct-to-consumer mortgage offerings.
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