Stocks to invest in when interest rates rise
Please refresh the page and retry. T he arrival of Donald Trump in the White House has brought expectations of a boost to the American economy and an increase in interest rates across the globe. Any rise from the rock-bottom Bank Rate of recent history will benefit many British companies. We look at five stocks that appear well placed to benefit from a rise in interest rates.
Actively Prepared for Rising Rates
Lloyds has been touted as the biggest beneficiary of interest rate rises by many fund managers. It has one of the simplest business models and its domestic focus makes it most exposed to a rise in rates in Britain.
The share price now hovers around 66p, but Stuart Mitchell, of SW Mitchell Capital, the asset manager, said he thought the bank was worth around p a share.
A s interest rates increase, the bank will not pass all of the rise on to savers. Instead it will retain some of the increase, boosting profit margins.
Car insurer Hastings listed on the stock market only in , so it does not have a long share price record. Car insurers take in the premiums paid by customers each year and then invest that money, typically in a one-year investment to match the duration of the policy. Instead the company will keep it and it will lead to significant earnings momentum. Hastings is also better positioned that some rivals as it adopted technology early, which is helping it to gain market share.
T ullett Prebon is a brokerage business, dealing mainly in bonds and the foreign exchange markets. The company links buyers and sellers of bonds and foreign currency products.
It is attractive for two reasons: The company will benefit from interest rates rises globally, as well as in Britain. Following interest rate rises in America last year, Tullett Prebon saw a pickup in business in the final three months of last year. As another insurer, Aviva is likely to benefit from an interest rate rise as it earns more on the money it invests and keeps in reserve.
4 High-Quality Financial Stocks That Will Benefit From Rising Interest Rates - TheStreet
GLG said the company benefited from a double whammy of earning more on its assets and being able to charge customers more as interest rates increased. H igher rates will also attract more customers in some areas of its business. Annuity rates, for example, are tied to interest rates, so, as interest rates rise, annuity rates will follow, making them more desirable for retired investors.
The price was around p in , before the financial crisis, and then fell consistently to around p now. The shares yield more than 5pc and trade at around nine times earnings, well below the market average. HSBC is a far more international bank than Lloyds.
However, this means it stands to benefit from interest rate rises in America as well as in Britain. We urge you to turn off your ad blocker for The Telegraph website so that you can continue to access our quality content in the future. Click here for instructions. Free Mobile App Jobs Financial Services Rewards Events Dating Offers Shop Garden Shop Bookshop Box Office Puzzles Fantasy Football Wine Shop Work at The Telegraph.
Log out My Account Subscribe Rewards Search Video. Login Register Subscribe Rewards Search Video. Log out Rewards My Account Search Video. Home News Sport Business. Shares Funds Buy to let ISAs JISAs SIPPs Special reports Telegraph Investor More. Buy these 5 stocks to profit as interest rates rise RUM. Aviva is one of the insurance companies to benefit from rise in Bank Rate Credit: Lloyds Banking Group Lloyds has been touted as the biggest beneficiary of interest rate rises by many fund managers.
The company also pays a decent dividend: Hastings Car insurer Hastings listed on the stock market only in , so it does not have a long share price record.
The yield is estimated to be 4. Lloyds is the ultimate value stock. Tullett Prebon T ullett Prebon is a brokerage business, dealing mainly in bonds and the foreign exchange markets. Aviva As another insurer, Aviva is likely to benefit from an interest rate rise as it earns more on the money it invests and keeps in reserve.
HSBC HSBC is a far more international bank than Lloyds. The stock also has a 6pc yield, making it attractive for income investors. Sign up to Telegraph Investor. Follow The Telegraph Follow on Facebook Follow on Twitter Follow on Instagram. Icap HSBC Lloyds Banking Group Shares Donald Trump Dividends Show more. If you would like to add a comment, please register or log in.
Where To Invest In A Rising Interest Rate Environment? | Financial Samurai
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