Discover is a natural beneficiary of a rising rate environment as it can also increase the rate it charges for outstanding balances. Right now, Discover has about $10 billion in student loans and another $7 billion in personal consumer loans.
With projected revenue expansion of 9% this fiscal year, better margins should help Discover accelerate its growth in 2022 if and when higher rates materialize. That’s saying something, considering the stock is already up 40% for the year-to-date.
And after a nearly 14% boost in its quarterly dividend in July, DFS now offers a decent 1.6% yield as a sweetener for those looking at the best stocks for rising interest rates.
- Market value: $31.3 billion
- Dividend yield: 0.6%
Credit data and analytics provider Equifax (EFX, $) is one of the three national credit bureaus that are effectively gatekeepers on nearly all consumer lending. And in a rising rate environment where loans are going to cost a bit more and consumers are eager to get their scores as high as possible to secure the best deal, EFX is very likely to see an uptick in demand for its services.
Additionally, in the last year or so, EFX has made a series of small but important acquisitions to widen its moat further in the lending and financial services space.Continue Reading