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Dow CEOs Make Millions: 2 Financial Blue Chips to Buy

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The CEOs of most of the companies in the Dow Jones industrial average have seen huge increases in their worth, with the blue-chip index continuing its record winning streak. The index, in fact, has seen a huge rally since the Presidential election, crossing the psychologically mark of 20,000 and now stands within a striking distance of 21,000.

President Donald Trump’s polices including tax cuts and pickup in infrastructure outlays restored expectations of a pro-growth agenda that helped the Dow push further into the record territory. Hence, investing in blue chip stocks is sure to be rewarding, especially financial behemoths as shares of such companies skyrocketed, banking on Trump’s promise to rip up financial regulations.

Stellar Dow Rally, CEOs Make a Fortune

The Dow industrials registered a 12th straight record close on Feb 27 as investors look for details when the President addresses lawmakers on Feb 28. This 12-session record run matches the longest streak that ended in Jan 1987. The blue-chip index hasn’t reached a 13 straight session of record close ever, according to Dow Jones data.

CEOs of Dow companies have made a fortune for themselves. Collectively they have witnessed around $400 million surge in the value of their stock holdings since Trump’s election, according to a study by Equilar, which calculated their returns in mid-February. This is an 18.4% increase, way above the Dow’s overall gain of 11% during that period.

Much of those gains were attributed to leaders of banking behemoths The Goldman Sachs Group, Inc. (GS - Free Report) and JPMorgan Chase & Co. (JPM - Free Report) . Goldman’s CEO Lloyd Blankfein saw his stock holdings soar 30%, banking on the post-election rally. Similarly, JPMorgan’s CEOJamie Dimon raked in a lot of moolah in this span.

Apple Inc. (AAPL - Free Report) , a staunch critic of the Trump administration, also saw its shares jump 23% since his victory. The iPhone maker had criticized the administration’s controversial immigration ban. But, the value of shares possessed by its CEO Tim Cook climbed considerably since the election. Other CEOs who have benefitted from the Trump Bump include American Express’ (AXP - Free Report) chief Kenneth Chenault and Boeing’s (BA - Free Report) Dennis Muhlenberg.

Let’s take a look at how much their shares have gained since Trump’s win last year.

CEO

Company

Increase in Value

Lloyd Blankfein

Goldman Sachs

$145.7 million

Jamie Dimon

JP Morgan

$115.5 million

Tim Cook

Apple

$22.6 million

Kenneth Chenault

AmEx

$12 million

Dennis Muilenburg

Boeing

$4 million

Source: Equilar

Trump Rally Boosts Dow Jones

Wall Street has bid up stocks since the election as investors bet that Trump’s market-friendly policies will stimulate the broader economy and boost corporate profits.Trump plans to overhaul tax codes for businesses and individuals over the next two to three weeks. He plans a multi-trillion-dollar tax cut that will boost the U.S. economy and drive corporate profits. Such a tax cut includes the trimming of the business tax rate to 15% from 35%, reducing individual tax rates and elimination of the estate tax. Corporates will also get a chance to repatriate foreign profits at a rate of 10%.

Trump is in favor of beefing up public spending by hundreds of billions of dollars on infrastructure. He said that he will support more spending on transportation and telecommunications infrastructure, clean water and electricity transmission in order to accelerate economic growth. Trump had said that “we are going to fix our inner cities, and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We’re going to rebuild our infrastructure, and we will put millions of our people to work as we rebuild it” (read more: Top Stock Picks for Trumps Trillion Dollar Infrastructure Plan).

Trump, in the meantime, signed an executive order to scale back the Dodd-Frank Act. The President views the Dodd-Frank regulatory overhaul as a harsh measure, especially, on banks as they had to beef up compliance compartments to deal with a list of new rules. Trump’s team is also focusing on scaling back the Financial Stability Oversight Council, which serves as a watchdog on big players in the economy (read more: 5 Stocks to Buy as Trump Raises Hopes for Banking Sector).

2 Financial Blue-Chips for Your Portfolio

Investors should be optimistic about possibility of positive economic policy change from the Trump administration, which should further help blue chip stocks rise steadily in the near term. Lest we forget, Fed Chairwoman Janet Yellen adopted a more hawkish stance which has helped financial blue chip companies register big gains. We have, thus, selected two such blue-chip stocks that have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

JPMorgan Chase & Co. operates as a financial services company. The company’s fourth-quarter 2016 earnings handily surpassed the Zacks Consensus Estimate on the back of improved trading and mortgage banking fees. Also, a rise in net interest income along with lower operating expenses and credit costs supported the results.

JPMorgan’s fourth-quarter 2016 earnings of $1.71 per share surpassed the Zacks Consensus Estimate of $1.42. Also, the figure reflects a 30% rise from the year-ago period. Notably, the results included a legal charge of $230 million and a tax benefit of $475 million related to the utilization of certain deferred tax assets.

The company remains well positioned to benefit from the improved rate scenario and rising loan demand. The Zacks Consensus Estimate for its current year earnings increased 1.4% over the last 60 days.The company’s estimated earnings growth rate for the current year is 5.9%. JPMorgan Chase has outshined the Banks-Major Regional industry in the last one-year period (+60.64% vs. +51.87%).

The Goldman Sachs Group, Inc. operates as an investment banking, securities, and investment management company. The company’s fourth-quarter 2016 results outpaced the Zacks Consensus Estimate on high fixed-income revenues and lower expenses.

Goldman’s fourth-quarter 2016 results recorded a positive earnings surprise of 6.7%. The company reported earnings per share of $5.08, outpacing the Zacks Consensus Estimate of $4.76. Moreover, the bottom line witnessed significant improvement on a year-over-year basis.

Notably, the Fixed Income, Currency and Commodities Client Execution unit experienced improved market conditions, with rise in interest rates and tighter credit spreads. The Zacks Consensus Estimate for its current year earnings rose 4.6% over the last 60 days. The company’s estimated earnings growth rate for the current year is 20.3%. Goldman Sachs has outperformed the Financial-Investment Bank industry over the last one year (+66.76% vs. +62.76%).

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