The consumer financial sector is uplifted by the rising wealth of high-net-worth individuals and the increasing demand for generative AI in financial services. Given this backdrop, it could be wise to consider fundamentally strong financial stocks such as OneMain Holdings, Inc. (OMF), Qifu Technology, Inc. (QFIN), and Artisan Partners Asset Management Inc. (APAM) with high dividend yields.
The financial services market is expected to at a CAGR of 7.6% by 2028. The expected growth is driven by the rising wealth of high-net-worth individuals, increased demand for alternative investments, greater blockchain adoption to prevent fraud, a rise in individual investor activities, more homeownership and mortgages, and overall investment growth.
Additionally, the demand for generative AI in financial services is also increasing as financial corporations focus on improving basic knowledge of investing and finance by continuous learning and improving by taking effective risks. Therefore, the U.S. generative AI in the financial services market is poised to grow at a CAGR of 27.3% by 2033.
Given these favorable industry trends, let’s look at the fundamentals of the top financial stocks with strong dividend yields.
OneMain Holdings, Inc. (OMF)
OMF is a financial service holding company that operates in the consumer finance and insurance businesses in the United States. It originates, underwrites, and services personal loans secured by automobiles, other titled collateral, or unsecured collateral.
OMF pays a $4.16 per share dividend annually, translating to an 8.79% yield on the current share price. Its four-year dividend yield is 13.39%. The company’s dividend payouts have grown at CAGRs of 21.4% and 74.5% over the past three and five years, respectively.
OMF’s trailing-12-month gross profit margin of 69.14% is 15.2% higher than the industry average of 60.01%. Further, the stock’s trailing-12-month net income margin of 24.13% is 4.5% higher than the industry average of 23.09%.
For the first quarter that ended March 31, 2024, OMF’s net interest income increased 1.7% year-over-year to $1.17 billion. The company’s total other revenues increased 9.3% year-over-year to $180 million. Additionally, its net income came in at $155 million, while its EPS came in at $1.29.
Street expects OMF’s revenue for the fourth quarter (ending December 2024) to increase 6.3% year-over-year to $1.17 billion. Its EPS for the same quarter is expected to grow 16.6% year-over-year to $1.62. Moreover, the company has an excellent earnings surprise history, surpassing consensus EPS estimates in three of the trailing four quarters.
OMF’s stock has gained 9.2% over the past year and 26.5% over the past nine months to close the last trading session at $47.41.
OMF’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Quality. OMF is ranked #15 among 44 stocks in the B-rated Consumer Financial Services industry.
Click here to access additional OMF ratings (Momentum, Value, Growth, and Stability).
Qifu Technology, Inc. (QFIN)
Headquartered in Shanghai, the People’s Republic of China, QFIN and its subsidiaries operate a credit-tech platform under the 360 Jietiao brand in the country. It provides credit-driven services and platform services.
QFIN pays a $1.16 per share dividend annually, translating to a 5.9% yield on the current share price. Its four-year dividend yield is 2.73%.
In terms of the trailing-12-month EBITDA margin, QFIN’s 47.36% is 106.5% higher than the 22.94% industry average. Its 26.81% trailing-12-month net income margin is 16.1% higher than the 23.09% industry average. Additionally, its 0.38x trailing-12-month asset turnover ratio is 78% higher than the 0.21x industry average.
QFIN’s total net revenue for the first quarter, which ended March 31, 2024, increased 15.4% year-over-year to RMB4.15 billion ($572.35 million). Its non-GAAP income from operations rose 33.7% over the prior-year quarter to RMB1.41 billion ($194.46 million).
For the same quarter, the company’s non-GAAP net income attributable to shareholders of QFIN and non-GAAP net income per ADS attributable to ordinary shareholders of QFIN came in at RMB1.21 ($166.88 million) and RMB7.58, respectively, up 23.3% and 28% year-over-year.
Analysts expect QFIN’s EPS for the fiscal 2024 to increase 12% year-over-year to $4.25. Its revenue for fiscal 2025 is expected to increase 6.5% year-over-year to $2.40 billion. QFIN’s stock has gained 26.4% over the past six months to close the last trading session at $19.28.
QFIN’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
QFIN has a B grade for Value and Quality. It is ranked #4 in the Consumer Financial Services industry.
In addition to the POWR Ratings we’ve stated above, we also have QFIN ratings for Momentum, Stability, Sentiment, and Growth. Get all QFIN ratings here.
Artisan Partners Asset Management Inc. (APAM)
APAM is a publicly owned investment manager. It provides its services to pension and profit-sharing plans, trusts, endowments, foundations, charitable organizations, government entities, private funds, and non-U.S. funds, as well as mutual funds, non-U.S. funds, and collective trusts. It manages separate client-focused equity and fixed-income portfolios.
APAM pays a $2.44 per share dividend annually, translating to a 6.1% yield on the current share price. Its four-year dividend yield is 8.89%.
APAM’s trailing-12-month EBIT margin of 31.14% is 33.6% higher than the 23.31% industry average. Its 32.09% trailing-12-month EBITDA margin is 39.9% higher than the 22.94% industry average. Likewise, the stock’s 24.25% trailing-12-month levered FCF margin is 35.1% higher than the 10.57% industry average.
APAM’s total revenues for the fiscal first quarter ended March 31, 2024, increased 12.8% year-over-year to $264.40 million. Its adjusted net income rose 18.9% over the prior-year quarter to $61.60 million. The company’s adjusted EBITDA increased 18.2% year-over-year to $86.30 million.
In addition, its adjusted operating income rose 16.6% year-over-year to $81.60 million. Also, its adjusted net income per share came in at $0.76, representing an increase of 18.8% year-over-year.
Street expects APAM’s revenue for the second quarter ended June 2024 to increase 13.7% year-over-year to $276.20 million. Its EPS is expected to increase 20.4% year-over-year to $0.86 for the same quarter.
APAM’s stock has gained 10.7% over the past nine months to close the last trading session at $39.50.
APAM’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Quality and Momentum. Within the Asset Management industry, APAM is ranked #4 out of 52 stocks.
Click here to access additional ratings of APAM for Growth, Value, Stability, and Sentiment.
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OMF shares were trading at $47.56 per share on Monday afternoon, up $0.25 (+0.53%). Year-to-date, OMF has gained 0.77%, versus a 17.47% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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