The divergence between emerging markets stocks and bonds and developed market securities is wide and could get wider if the Federal Reserve continues to raise rates as expected. One sector that could benefit more than most is the financials, and with the third quarter almost in the books and investors turning their attention to the final three months of 2018, it makes sense to add some of the top stocks to growth portfolios.

With the Federal Reserve deleveraging the huge balance sheet it amassed over the many years of quantitative easing, many of the top U.S. banks look to be in good position to capitalize. Plus, with rates going higher, especially on the short end, the ability to increase gains on net interest margins looks solid.

We screened the Merrill Lynch research database looking for financial stocks rated Buy that pay dividends. We found four that look like great portfolio additions now.

Citigroup

Shares of this top bank have traded down over 15% from highs posted in January. Citigroup Inc. (NYSE: C) has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. It provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management.

Trading at a still very cheap 9.25 times estimated 2019 earnings, the stock looks very reasonable in what is becoming a pricey stock market. A continuing stock buyback program at the bank is also positive.

The banking giant reported weaker-than-expected quarterly revenue. The company’s earnings per share, however, handily topped estimates.

Citigroup investors are paid a 2.55% dividend. The Merrill Lynch price target for the stock is $84, and the Wall Street consensus price objective is $83.52. The stock traded early Thursday at $71.40 per share.

Goldman Sachs

This stock trades at a very reasonable 9.35 times estimated 2019 earnings, and it is a member of the Merrill Lynch US 1 list. Goldman Sachs Group, Inc. (NYSE: GS) has a gigantic institutional equity, debt and derivatives business, an ultra-high net worth clientele, top investment banking and capital markets expertise. The firm continues to be a dominant force around the world, one of the most sought-after banks one of the very few firms that dictate who can be a client.

In investment banking, the company has the preeminent client franchise. Goldman Sachs advised on more than $1.5 trillion of announced mergers and acquisitions transactions last year, the highest level the bank has ever recorded. It also has maintained a leading market share over the past 25 years.

Second-quarter profit surged 40% year over year, exceeding analysts’ estimates on better-than-expected revenue from every major business with the exception of trading. Three of the bank’s four main businesses all posted surprisingly strong results, thanks to higher private equity gains and fees from equity issuance.

Goldman Sachs shareholders are paid a 1.4% dividend. Merrill Lynch has a $280 price target on the stock, and the posted consensus price objective is $276.23. The stock was last seen trading at $229.60 a share.

JPMorgan

This stock trades at a very reasonable 11.3 times estimated 2019 earnings and also could respond well in a rising rate scenario. JPMorgan Chase & Co. (NYSE: JPM) is one of the leading global financial services firms and one of the largest banking institutions in the United States, with about $2.6 trillion in assets. The company as it is today formed through the merger of retail bank Chase Manhattan and investment bank J.P. Morgan.

The firm has many operating divisions, including investment and corporate banking, asset management, retail financial services, commercial banking, credit cards and financial transaction services. Earnings were outstanding, and the analysts remain very positive on the shares for the balance of 2018.

JPMorgan investors are paid a 1.98% dividend. The $126 Merrill Lynch price objective compares with a consensus target price of $122.17 and the most recent close at $113.08 per share.

Wells Fargo

This large cap bank remains a solid value play for 2018, though it may face the possibility of some additional fines. Wells Fargo & Co. (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.8 trillion in assets. The company provides banking, insurance, investments, mortgage and consumer and commercial finance through 8,700 locations, 12,800 ATMs, the Internet and mobile banking. It also has offices in 36 countries to support customers who conduct business in the global economy. Wells Fargo serves one in three households in the United States.

Wells Fargo has slowly, but surely, become one of the biggest mortgage lending companies in the United States, in addition to its normal banking and brokerage businesses. A continued increase in commercial real estate lending could really boost the bank’s bottom line and overall revenue. The company trades at 10.85 times estimated 2019 earnings.

Wells Fargo shareholders are paid a decent 3.07% dividend. Merrill Lynch has set its price target at $68. The consensus target is $62.28, and the stock traded at $55.99 Thursday morning.

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All four of these top stocks are trading well below 52-week highs, and all boast extremely reasonable valuations. They make good sense for growth portfolios looking to add solid companies that have the potential for good moves higher over the fourth quarter and into 2019.

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