State Street Corporation (STT)

State Street safekeeps and services institutional assets — a custodian bank rather than a lender.

The core business is safekeeping securities for funds, pension systems and insurers, with record keeping, settlement and reporting. Fees scale with assets under custody, so income grows with markets and carries almost no credit risk.

The second line is asset management through the SPDR fund family, including one of the market's oldest exchange-traded funds. Fees there also scale with assets, but competition presses them down. Interest income on client balances rises with rates. The company pays a dividend and buys back stock. Scale is essential here: platform costs are largely fixed, and servicing twice the assets costs only marginally more.