With Fed chair Kevin Warsh hinting at more rate hikes and inflation still above the 2% target, the gap between winners and laggards in US large cap value stocks could widen. Income focused investors may want to focus on where dependable dividends and tighter policy might intersect. This article walks through three US financial stocks exposed to this macro story and explains why they are on the radar now.

The stocks covered below are only a small sample of this idea. The full screen surfaced 31 more US financial companies with similar value, dividend and quality traits that are not discussed here. To see the broader opportunity set, head straight into the US Large-Cap Value & High-Dividend Financials screener to identify, filter and analyze the large cap value and income plays that best fit your approach.

Credicorp (BAP)

Overview: Credicorp is a Peru based financial group that combines a large universal bank with insurance, pensions, wealth management and microfinance operations across several Latin American markets. For this US Large Cap Value & High Dividend Financials screen it brings a sizeable dividend paying banking platform with material interest income exposure and additional fee income from health, insurance and investment services.

Operations: Credicorp generates most of its PEN 22.7b in segment revenue from Universal Banking at Banco de Crédito del Perú at PEN 15.4b and related Bolivian banking at PEN 442m, with meaningful contributions from Pacifico Seguros insurance at PEN 1.8b, Mibanco microfinance at PEN 2.1b plus Colombia microfinance at PEN 490m and investment management at PEN 1.2b, largely tied to Peruvian clients and operations.

Market Cap: US$29.6b

Credicorp provides exposure to a large Latin American banking and insurance group that fits a value and dividend focused screen, with sensitivity to higher rate regimes that affect net interest income. The group combines a major Peruvian bank and regional microfinance with fee-generating businesses in insurance, pensions and asset management, which supports high profit margins and return on equity. It is also investing in digital ecosystems such as Yape. Investors need to weigh this profile against credit risk, with bad loans above typical comfort levels, an uneven dividend history and recent insider selling. For those evaluating how higher rates and digital adoption may influence a regional bank’s earnings mix, Credicorp is a company that may merit closer review.

Credicorp’s mix of universal banking, insurance and microfinance can make its earnings profile look more resilient than a typical lender, yet the real story only comes into focus in the 3 key rewards and 3 important warning signs

Citizens Financial Group (CFG)

Overview: Citizens Financial Group is a large U.S. bank holding company that sits firmly in the US Large Cap Value & High Dividend Financials theme, with a nationwide consumer and commercial banking franchise that gives direct exposure to U.S. interest margins and deposit flows. Through its Consumer and Commercial Banking segments it provides everyday banking, mortgages, cards, small business lending, corporate loans and wealth management to customers ranging from individuals to large institutions across the country.

Operations: Citizens Financial Group generates about US$6.2b of revenue from Consumer Banking and US$2.6b from Commercial Banking, with total revenue of roughly US$8.2b coming entirely from the United States.

Market Cap: US$29.6b

For income focused investors looking at higher for longer rates after Kevin Warsh’s hawkish Jackson Hole comments, Citizens Financial Group offers a direct way to link that macro story to a large U.S. bank built around net interest income and dividends. The bank is working to “reimagine” its model through technology, digital products and a growing private wealth arm, while also shifting toward higher quality, relationship driven lending and a more efficient deposit mix. At the same time, you need to factor in risks such as ongoing commercial real estate exposure, insider share sales this summer and regional concentration in the Northeast and Midwest. If you want a deeper read on whether that balance of value, dividend income and rate sensitivity suits your portfolio, Citizens Financial Group is worth a closer look.

Citizens Financial Group is reworking its model around higher quality lending, digital products and private wealth at the same time. To see how that balance of change, dividends and rate exposure really stacks up, go straight to the analysis report for Citizens Financial Group

Capital Southwest (CSWC)

Overview: Capital Southwest is a Dallas based business development company that lends to and takes minority equity stakes in lower middle market U.S. businesses. It offers investors exposure to a high dividend, credit focused financial stock that fits the US Large-Cap Value & High-Dividend Financials theme and is closely linked to short term interest rates through its floating rate loans.

Operations: Capital Southwest generates all of its approximately US$237 million in investment income from its U.S. portfolio.

Market Cap: US$1.6b

Capital Southwest provides a focused exposure to private credit within this high dividend financials screen, with a roughly 10% yield, a portfolio tilted to first lien loans and long standing links to private equity sponsors that continue to source new deals. Fed chair Kevin Warsh’s hawkish tone and the prospect of higher short term rates are helpful for a lender with largely floating rate assets. However, the flip side is pressure on portfolio companies’ interest coverage and the need to watch non cash earnings and dividend coverage closely. Combined with regular supplemental dividends and plans for further equity issuance, this creates a high income story with enough moving parts that it rewards closer homework rather than a quick glance.

Capital Southwest’s high dividend profile and floating rate credit book can look straightforward. The real question is how that income story lines up once you factor in coverage, non cash earnings and the analysis report for Capital Southwest

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.