In this article, we will take a look at the most profitable financial stocks to invest in.
The financial sector is among the most vulnerable sectors to macroeconomic shifts. That said, not all financial stocks are the same. While some consistently generate strong profits through disciplined risk management, others struggle to withstand economic shocks, such as a stringent regulatory environment and constantly changing interest rates.
That said, financial markets, especially equity markets, remain driven by a plethora of dynamic factors. An article by BlackRock, titled “A global macro outlook for 2026: patience,” highlights that the last three quarters of 2025 were defined by a comparatively “boring” rally. Published on January 3, the article outlines that moving into 2026, the overall positioning reflects restricted equity exposure, coupled with short positions in long-term government bonds and the US dollar.
Having said that, the 2026 outlook appears more closely tied to above-trend economic growth, supportive policy, and enhanced productivity, according to a “Investment Directions: 2026 outlook” publication by iShares on January 5. Although this will favor risk-taking, investors should closely monitor labor-market headwinds, elevated valuations, and an uncertain interest rate environment.
The article advances by citing a recent client survey that underpins rising market optimism. As stated,
“Nearly 50% of respondents in our latest client survey characterized themselves as bullish, and those who did were most likely to take risk in U.S. equities (48%) and emerging markets (24%). Investors identifying as bearish were more likely to look to developed markets abroad (24%) or consider Alts (24%).”
Keeping this macroeconomic outlook in mind, we have compiled a list of the most profitable financial stocks to invest in.
Copyright: kritchanut / 123RF Stock Photo
Our methodology
To compile our list of the 11 most profitable financial stocks to invest in, we used the Stock Analysis screener to filter for stocks in the financial sector with a market capitalization of more than $2 billion that reported a net profit margin of over 20% and a 5-year average return on equity of at least 8%-10%. From this pool, we shortlisted the top 11 stocks with the highest trailing twelve-month (TTM) net income. These are then ranked in ascending order by net income. We also included data on hedge fund holdings in these companies based on Insider Monkey’s database, as of Q3 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
11. The Charles Schwab Corporation (NYSE:SCHW)
Net Income (TTM): $8.42 billion
Profit Margin (TTM): 37.0%
Number of Hedge Fund holdings: 99
According to a January 22 report from The Fly, Barclays analyst Benjamin Budish reaffirmed his bullish view on The Charles Schwab Corporation (NYSE:SCHW) with an Overweight rating. The analyst also raised his price target to $125 from $120, following the Q4 results. According to the analyst, the results were in line with expectations, and the company provided a conservative outlook.
In its Q4 results a day earlier, The Charles Schwab Corporation (NYSE:SCHW) reported revenue of $6.34 billion, modestly below the $6.39 billion consensus. With core net new assets of $163.9 billion in Q4, total client assets rose 18% year-over-year to a record $11.9 trillion. Net interest margin (NIM) performance remained solid, with Q4 NIM coming in at around 2.9%, a 57 basis points improvement year over year.
For FY 2026, management guided to an NIM of 2.85%-2.95%, supported by modest expansion in average interest-earning assets relative to FY25. With FY26 adjusted expenses expected to increase by 5.5%-6.5% year over year, Schwab expects adjusted pre-tax margins to expand further into the low-50% range. Management noted that Forge Global (its recent acquisition) is not included in the FY26 guidance.
Encouraged by the results, President & CEO Rick Wurster stated,
Clients are conducting more of their financial lives at Schwab, with record engagement across wealth management, trading, and banking. Net inflows into our Managed Investing solutions grew by 36% versus 2024, while bank loan originations achieved another record year.
10. Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA)
Net Income (TTM): $11.76 billion
Profit Margin (TTM): 32.9%
Number of Hedge Fund holdings: 12
On January 21, TheFly reported that Citi lifted the price target on Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) to EUR 23.50, up from EUR 21.50, and reiterated a Buy rating.
Earlier on January 9, BofA Securities also raised the price target on Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) to EUR 24.30 from EUR 21 and kept a Buy rating. Antonio Reale, an analyst at the firm, noted the company’s “enviable quality franchise with solid market shares” throughout its key markets in Mexico, Türkiye, and Spain.
With a 60% contribution to the company’s group profits, the Mexican market could benefit from a trade agreement with USMCA to resume near-shoring activities, and thus reduce volatility in the region. The Türkiye operations, on the other hand, are forecasted to witness substantial growth as profits are expected to approximately triple by 2028. This comes even amid higher provisions.
Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA), based in Bilbao, Spain, provides retail and wholesale banking and asset management services. Founded in 1857, the company offers its products through online and mobile channels.
