16% Trailing Yield, Very Undervalued With 15%-20% Upside Potential

As the economy improves, consumers will continue ramping up purchases. Conversely, as the government's consumer stimulus checks' effects fade, more consumers will look for loans in order to finance those purchases. Both of these trends will have a positive effect on consumer finance companies. Management raised the quarterly dividend by 55% in Q2 and intends to continue paying higher extra dividends in Q1 and Q3 - it paid $3.50 each quarter. The company's trailing yield is 16.42%, and its potential forward yield is 12% to 17%. It is the largest US near-Prime loan servicer - the reopening economy and fading stimulus programs will increase the loan business. The company has significantly cheaper valuations vs. its peers, is 13% below analysts' lowest price target, and 22% below the consensus price target.

OneMain Holdings (OMF) engages in the consumer finance and insurance businesses. The company originates, underwrites, and services personal loans secured by automobiles, other titled collateral, or are unsecured. The company also offers credit insurance products comprising life, disability, and involuntary unemployment insurance, optional non-credit insurance, guaranteed asset protection coverage as a waiver product or insurance, and membership plans. OneMain Holdings, Inc. was founded in 1920 and is based in Evansville, Indiana.

Source: Seeking Alpha

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