Financial stocks uncovered: Starting with just 9,900 for small investors, earning 6%+ annual interest while collecting dividends and waiting to exercise rights — the "lazy wealth management strategy"

Taiwan stocks are stuck at 28,000 points in a high range, but have you noticed? The flood of funds is pouring into financial stocks. Compared to tech stocks, which are cut by 10% every time they pull back, the volatility of financial stocks is simply child’s play, and their dividend yields can still reliably earn 5-7%. This is not a coincidence; capital is undergoing a major “value return” transition.

Why are financial stocks especially attractive now?

Valuations are ridiculously cheap
Tech stocks have already played with P/E ratios over 30, while growth momentum is slowing down. In contrast, most bank stocks are trading at 10-12 times earnings, a huge gap that’s hard to ignore. As the soft landing of the economy becomes more certain, smart capital naturally starts picking up bargains.

Interest rate environment is not the enemy
Don’t be fooled by the saying “rate cuts hurt banks.” Taiwan’s financial industry has already earned over 560 billion NT dollars by November, hitting a new high. As long as the economy doesn’t hard land, dividend payout capacity in 2026 will only strengthen. That’s why now is a good time to grab stocks with room for a rebound.

A defensive fortress in economic cycles
Think back to the 2022 bear market. The weighted index plunged 20%, but the financial index only fell 15%. Financial stocks have this characteristic—they can attack when advancing and defend when retreating. When tech stocks shake, investors can’t sleep; but financial stocks only sway 3-5%, with minimal psychological pressure.

Global markets are entering a rotation era. After the magnificent rally of the Magnificent 7, capital naturally flows into value stocks with low P/E ratios and high dividend yields. Financial stocks typically trade at 15-20 times earnings, with stable dividends, acting like a compass in volatile environments.

Of course, risks exist. If in 2026 the Fed reduces rate cuts less, the economy slows, or trade tensions escalate, non-performing loan risks will rise. But this also underscores the importance of diversification—don’t put all your chips into one stock.

How to choose financial stocks? Quick classification guide

There are about 49 financial stocks in Taiwan now. First, understand the differences among various types to allocate more wisely.

Financial holding companies are the most comprehensive. They own banks, life insurance, securities, fund management, and more, offering full services, large assets, stable shareholder structures, and are favored by retail investors. Fubon Financial, Cathay Financial, and CTBC Financial are typical examples.

Bank stocks are simply stocks issued by banks themselves, like Chang Hwa Bank and Taichung Bank. Their main business is deposits and loans, more stable than insurance, but less diversified in growth.

Insurance stocks earn through premiums and investment returns. They are more volatile than banks, but their stock prices react especially strongly when interest rates rise or fall.

Securities stocks mainly rely on brokerage business, profiting well when market turnover is high. The logic is straightforward: high market activity → good brokerage profits.

Fintech-related stocks focus on digital payments and innovative applications, like PayPal and Mastercard. They have strong growth but also higher volatility.

New investors usually start with financial holding companies because they are the most stable, diversified, and offer reliable dividends (many over 5%). For steady income, pure bank stocks are better due to less volatility. If you want to profit from market rotation, timing insurance and securities stocks is more critical.

For those with less capital, starting with financial ETFs (0055, 006288U) is the smartest—low threshold and risk diversification. If you want to trade short-term and adjust positions, there are also CFD options with zero commissions to try.

Taiwan financial stock recommended portfolio (latest 2025 version)

Based on the latest data and institutional forecasts, I selected 4 financial holding stocks and 1 bank stock, covering different strengths, to help you quickly find suitable targets.

Fubon Financial (2881): Dual engines of insurance

Fubon Life contributes steadily, with wealth management and digital banking taking off. 2025 EPS is estimated at 4.5-5 NT dollars, with a P/E ratio of only 12. Active in sports marketing, with long-term brand potential.

Risk: Overseas expansion may be affected by geopolitical fluctuations, which could drag on profits.

Cathay Financial (2882): Southeast Asian cash cow

Vietnam and Thailand insurance businesses are growing rapidly, with wealth management fees increasing 15% annually. EPS is estimated at 4 NT dollars, P/E of 11, with high valuation attractiveness. If interest rates stabilize in 2026, insurance performance can improve further.

Risk: Insurance is sensitive to interest rates; rapid rate cuts could compress investment yields.

CTBC Financial (2891): Digital transformation pioneer

Mobile banking users are projected to grow 20% in 2025, leading in digital transformation among peers. Exposure to the Chinese market is relatively limited but has potential. EPS estimated at 2.8 NT dollars, P/E of 13, with good growth space.

Risk: Uncertainty in Chinese policies is a hidden risk.

E.SUN Financial (2884): Steady dividend machine

Mainly focuses on SME loans and retail banking, with net interest income growing 10% annually. EPS estimated at 2.5 NT dollars, P/E of 12, ideal for long-term dividend collection.

Risk: Business concentrated in Taiwan; domestic economic slowdown could impact growth.

Chang Hwa Bank (2801): The lowest-priced pure bank stock

High capital adequacy, stable loan quality, 12% growth in wealth management. EPS estimated at 1.5 NT dollars, P/E only 10, making it the most undervalued choice.

Risk: Single business model, less diversification.

US bank stocks also worth watching

The top institutional favorites for 2026 can now be directly bought via custodial trust or financial ETFs.

BRK.B Berkshire Hathaway is the most famous conglomerate worldwide. Managed by Buffett, owning hundreds of companies in insurance, railroads, energy, and holding large positions in Apple and American Express. Simply put, it uses insurance cash flow to buy good companies and earn compound interest, known as “the most stable defensive stock in US stocks.”

JPMorgan Chase is the largest US bank, with retail, investment banking, wealth management, and credit card services. Over 300,000 employees globally, market cap over $800 billion. If capital markets stay hot in 2026, profit growth potential is huge.

Bank of America focuses on retail clients. Over 68 million customers, the largest deposit base in the US. Many Americans keep their salaries here, making their business highly sticky.

Goldman Sachs is the pinnacle of Wall Street investment banks, specializing in M&A, IPOs, and trading. Clients are mainly corporate bosses and institutional investors. If capital markets remain active in 2026, this stock could explode, but it’s also more volatile. Recommended allocation should not exceed 20%.

American Express is the global leader in high-end credit cards, with strong consumer spending power. Mainly earns from card fees, not interest spreads. High-net-worth clients have resilient consumption, stable regardless of economic cycles.

How to operate “fixed deposit” style with financial stocks most wisely?

Many treat financial stocks as fixed deposit stocks, just collecting dividends annually. This is feasible, but it’s important to understand—financial stocks earn much more than bank fixed deposits, but also come with volatility and risks.

My practical strategy:

Stock selection principles are simple: high dividend yield (at least 5%), low P/E ratio (Taiwan financial holding companies 10-15x, US stocks 15-20x), stable profits. Examples include Fubon, Cathay, E.SUN in Taiwan, and JPM, BAC in US.

Timing is crucial: Usually, during market highs and tech stocks pulling back, it’s the best time to enter. Capital rotation to financials is most obvious then. Or buy in batches when dividend yields exceed 6-7%. After buying, just hold and collect dividends annually.

Adjust target prices dynamically: Don’t set rigid prices. For example, if your target was 50 NT dollars but the stock only rises to 45, and the company’s profit improves, raise your target to 60. Time is always a friend to good companies, especially mature industries like financials.

When to reduce holdings: When your psychological target price is reached, or dividend yield drops below 4% (meaning stock price has risen too much), consider trimming or selling completely, and switch to undervalued targets.

This approach mainly earns from dividends and stock rebound, so no need to watch the market every day.

But honestly—although financial stocks seem stable and less volatile, they do carry risks. Over the past 10 years, their performance hasn’t outperformed the broader market. During black swan events, financial stocks often fall deeper. In 2015 during China’s A-share crisis, the 0055 financial ETF dropped 36%, while 0050 only fell 24%. In 2022 during Russia-Ukraine war, Sberbank plunged 50% in days, trading on overseas exchanges at $0.01 and forced to halt trading.

Sector trading is the real king for financial stocks

Financial stocks are cyclical “economic cycle stocks” with very strong periodicity. Compared to long-term fixed deposit strategies, short- to medium-term swing trading is more suitable.

Swing trading uses technical analysis to profit from bull market rallies and bear market declines, offering investors great flexibility. Common indicators include moving averages, support/resistance, RSI, etc. Starting with just 3 simple steps:

1. Register an account — fill in info, submit application
2. Deposit funds — multiple methods supported, minimum as low as $50 USD
3. Trade — discover opportunities anytime, anywhere

Long-term outlook: do financial stocks still have potential?

Financial stocks make up about 13% of the US S&P 500 and have always been a market pillar. While they lack the explosive growth of tech stocks, their low volatility, stable dividends, and conservative management allow them to outperform the market over the long run.

Three major advantages support long-term value

Over the past 30 years, the growth rate of financial industry earnings has significantly outpaced the overall economy, enabling financial companies to pay above-average dividends and create a stable P/E structure.

Governments won’t easily let big banks fail. The financial sector’s link to global economic health is proven by the massive bailouts after the 2008 crisis. This makes financial stocks much less risky than other industries.

Banking, insurance, and macroeconomic ties are deep, with volatility usually much lower than tech stocks. They serve as natural hedges during recessions or crises.

Future outlook

As long as the US avoids recession, banks’ prospects are bright. They benefit from higher interest rates—net interest margin (NIM) will expand. Although rapid rate fluctuations can cause chaos, over time, banks will adjust their asset-liability structures for stronger profit growth.

Unavoidable risks

Market risk is the deadliest: During bear markets, the bottom of the index is hard to predict, and financial stocks often fall deeper. When systemic risks from black swan events occur, financials are hit hardest.

Interest rate risk is often overlooked: Rising rates benefit banks (wider spread), but low rates squeeze profits. Investors find it hard to predict rate movements accurately.

Non-performing loan (NPL) risk is deep: Financials are involved in many industries; if borrowers can’t repay, banks face NPL crises.

Diversification in your portfolio is the best insurance—don’t put all your chips into one stock.

Summary

While financial stocks lack the explosive growth of tech stocks, as a pillar making up 13% of the S&P 500, they have long-term potential to outperform the market. For Taiwanese investors, now is a good time to allocate into US financial stocks—valuations are reasonable, dividends are stable, and growth potential remains.

Whether choosing Taiwanese financial holding companies or US bank stocks, the key is understanding your risk tolerance and finding suitable allocations—fixed income, swing trading, or a hybrid approach—all have their markets. The main point is to treat financial stocks as a stable cornerstone of your investment portfolio, not to put everything into one stock. Time will prove that selecting the right targets and steadily collecting dividends will restore the market’s recognition of their value.