Three Financials You Should Add To Your Portfolio in 2016

Wells Fargo, Signature Bank and Federated Investors could turn out to be three of 2016's biggest financial sector winners.

Author:: Gregg Greenberg
Publish date:: Jan 5, 2016 1:42 PM EST

Shares of Wells Fargo (WFC) were up 4 percent last year, outperforming both the broader market and the overall financial sector. Erik Oja, equity analyst at S&P Capital IQ, said the mega-bank will shine even brighter in 2016 once higher interest rates kick in. 'We think Wells Fargo is best poised to benefit from higher rates due to its large deposit base and industry leading loan growth,' said Oja, adding that he expects much higher revenue growth in the coming year after a recent slowdown. Shares of Federated Investors (FII) fell approximately 9 percent in 2015, yet Oja expects a big turnaround in 2016, once again due to the prospect of higher rates ahead. 'The money market fund business which is unprofitable now should become more profitable as rates rise because Federated has to reimburse for the servicing fees for these funds,' said Oja, who also admires the fund company’s 3.5 percent dividend yield.