Federal Reserve Chair Jerome Powell said on September 22 that benchmark interest rates will be held near zero, and the central bank will continue the current pace of asset purchases. Nevertheless, the financial sector has seen a continuing recovery due to increasing financial transactions and capital market activities.

Adding to the positives, the Federal Reserve said that it could soon slow its large-scale purchases of government-backed bonds and indicated it might raise interest rates in 2022, which should help financial companies increase their interest income. Moreover, according to a Globe Newswire report, the global financial services market is expected to grow at a 9.9% CAGR to hit $22.5 trillion this year.

Therefore, Canadian Imperial Bank of Commerce (CM), Prudential Financial, Inc. (PRU), and Huntington Bancshares Incorporated (HBAN) could be solid bets due to their market dominance and more than 4% dividend yield. Furthermore, these stocks have outperformed the S&P 500’s 18.5% gains year-to-date.

Canadian Imperial Bank of Commerce (CM)

Toronto’s diversified financial institution Canadian Imperial Bank of Commerce provides financial products and services to personal, business, public-sector, and institutional clients. The Canada-based company operates through four strategic business units: Canadian Personal and Business Banking; Canadian Commercial Banking and Wealth Management; U.S. Commercial Banking and Wealth Management; and Capital Markets.

On September 2, CM announced that it had signed a long-term agreement to become the exclusive issuer of Costco Mastercards in Canada. The initiative is expected to start in early 2022. In addition, the agreement could significantly expand CM’s credit card portfolio and enable high-quality growth through stronger client relationships.

CM’s dividend payouts have grown at a 5.5% CAGR over the past five years and 3.6% over the past three years. While its four-year average dividend yield is 5.1%, its current dividend translates to a 4% yield. Also, it announced a $1.46 quarterly dividend on August 26, 2021, payable on October 28.

CM’s revenues increased 7.4% year-over-year to $5.05 billion for its  fiscal third quarter, ended July 31, 2021. The company’s adjusted net income grew 45% year-over-year to $1.81 million, while its adjusted EPS increased 45% year-over-year to $3.93.

CM’s EPS is expected to be  $11.54 in its fiscal year 2021, representing a 53.3% year-over-year increase. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. The company’s revenue is expected to increase 12.1% year-over-year to $4.01 billion for the quarter ending October 31, 2021. The stock has gained 34.9% in price year-to-date to close yesterday’s trading session at $115.28.

Prudential Financial, Inc. (PRU)

PRU provides insurance, investment management, and other financial products and services internationally. Its segments include PGIM; Retirement; Group Insurance; Individual Annuities, and Individual Life. In addition, it offers its products and services to individual and institutional customers. PRU is based in Newark, N.J.

On August 5, PRU provided $60 million of senior secured notes to Rougaroux Power Holdings, LLC, an indirect owner of a 192-megawatt operating hydroelectric project in Louisiana. Wendy Carlson, a managing director in PRU’s Prudential Private Capital, said, “Our partnership with Rougaroux reinforces our long-term commitment to investments in real assets.”

The company paid a $1.15 quarterly dividend per share on September 16. PRU’s dividend payouts have grown at a 10.2% CAGR over the past five years and 9.7% over the past three years. While its four-year average dividend yield is 4.5%, its current dividend translates to a 4.5% yield.

PRU’s after-tax adjusted operating income increased 104.6% year-over-year to $1.51 billion for its  fiscal second quarter, ended June 30, 2021. The company’s net income came in at $2.16 billion, compared to a $2.41 billion loss in the year-ago period. Also, its EPS came in at $5.40, versus  a $6.12 loss per share in the prior year period.

Analysts expect PRU’s EPS and revenue to increase 31.9% and 3.1%, respectively, year-over-year to $13.47 and $55.84 billion in its fiscal year 2021. In addition, it surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 32.2% in price so far this year to close yesterday’s trading session at $103.21.

Huntington Bancshares Incorporated (HBAN)

HBAN is a Columbus, Ohio-based regional bank holding company with $123 billion in  assets and a network of 839 branches, including 11 Private Client Group offices and 1,322 ATMs across seven Midwestern states. The company provides consumer, small business, commercial, treasury management, wealth management, brokerage, trust, and insurance services.

HBAN launched Early Pay on June 28, 2021, which gives customers early access to paychecks at no extra cost. This new product adds to the company’s suite of digital and fair play banking products that make banking easier for customers. HBAN’s CEO Steve Steinour said, “We must continue to innovate to meet the rapidly changing needs and preferences of our customers.”

HBAN’s four-year average dividend yield is 4.1%, and its current dividend translates to a 4% yield. Its dividend payouts have grown at a 16.5% CAGR over the past five years and 8.5% over the past three years. It announced a $0.15 quarterly dividend on July 23, payable on October 1.

HBAN’s total revenues increased 8% year-over-year to $1.29 billion for its  fiscal second quarter, ended June 30, 2021. In addition, the company’s net interest income grew 6% year-over-year to $838 million, while its total assets increased 17% sequentially to $175.17 billion.

For its fiscal year 2021, analysts expect HBAN’s EPS to come in at $1.15, representing a 66.7% year-over-year increase. In addition, the company’s revenue is expected to increase 37.6% year-over-year to $1.71 billion for the quarter ending December 31, 2021. The stock has gained 19.6% in price year-to-date to close yesterday’s trading session at $15.11.

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