In recent years, some major XLF components have steadily raised dividends after paring payouts during the global financial crisis. However, XLF yields just 1.59%, implying significant room for dividend growth going forward.
“Add to that strong M&A activity, an increase in net interest margins, and loan growth, and he (Kostin) sees plenty of upside ahead of shares,” according to Barron’s.
Deregulation could also help the financial sector improve their margins. President Donald Trump has shown its eagerness in cutting back the red tape and remove some of the post-financial crisis regulations that has stifled the industry.
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