6 shares that will increase by a higher interest rate

Financial stocks traditionally benefit from higher interest rates. They rose after the election of President Trump, but how many can after yesterday's decision of the FED?

According to analyst Richard X. Bove of Rafferty Capital Markets, due to security measures put in place during the Great Recession, financial institutions are sitting on mountains of cash that are earning very low returns.

In the last 10 years, the government has forced them to raise their cash and securities, so if you get an increase in rates they see a jump in interest income"

1. Bank of America
   Symbol: BACShare price: $25.31

   Market cap: $253.7 billion

   Dividend yield: 1.1%

   All of the big national banks should get a lift from rising interest rates, but Bank of America stands out. By the bank's own estimates, a one-percentage-point rise in short- and long-term rates would increase its net interest income -- the difference between how much it earns in interest on loans and how much interest it pays on deposits -- by $3.4 billion a year. That's real money even for a bank the size of Bank of America, which reported net interest income of $10.3 billion in the fourth quarter.

2. Berkshire Hathaway
   Symbol: BRK.B

   Share price: $174.98

   Market cap: $431.6 billion

   Dividend yield: 0%

   As an owner of insurance companies and an investor in big banks, Warren Buffett's Berkshire Hathaway will profit from rising interest rates in a number of ways

   Since Berkshire currently has about $85 billion in cash invested primarily in short-term Treasuries, a [one percentage point] increase in short-term interest rates results in an additional income of $850 million per year for Berkshire.

3. JPMorgan Chase
   Symbol: JPMShare price: $91.28

   Market cap: $326.1 billion

   Dividend yield: 2.1%

   After Bank of America, Bove says JPMorgan Chase is best positioned to take advantage of higher interest rates. "They have something like $600 billion in assets that would see an increased return when interest rates go up."

4. Markel Corp.
   Symbol: MKLShare price: $975.96

   Market cap: $13.6 billion

   Dividend yield: 0%

   Property and casualty insurance companies are a big under-the-radar beneficiary of rising interest rates. But Markel, a specialty insurance company operating in variety of niche markets, has an unusual group of holdings that works to its advantage.

5. Northern TrustSymbol: NTRS

   Share price: $89.30

   Market cap: $20.4 billion

   Dividend yield: 1.7%

   Northern Trust is a financial holding company, offering services such as wealth management, private banking and custodial and administrative services for institutions.

6.  TD AmeritradeSymbol: AMTDShare price: $39.42

   Market cap: $20.8 billion

   Dividend yield: 1.8%

   TD Ameritrade is also getting a better deal on its $4 billion acquisition of Scottrade, announced in October. Credit Suisse notes that the rise in interest rates has already made a marked difference in the value of the deal because Scottrade is to move $28 billion in customer deposits to TD Ameritrade.

   Source Kiplinger

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