Prudential plc Could Help You Retire Early

Retirement may not be so long away for shareholders in Prudential Plc (LON: PRU). Here’s why…

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

How different the investment landscape looks at the start of 2014, compared to the view at the start of 2013!

Certainly, the market seems to be far more confident than it was a year ago, with price-to-earnings (P/E) ratios being upgraded significantly during the year. Although growth figures are yet to hit their much-anticipated heights, they do seem to be moving in the right direction and company expectations seem to be more bullish than for a long time.

One way to potentially benefit from improved sentiment (and to hopefully make retirement come a little sooner than the government thinks it will for you) is to buy more cyclical, volatile stocks that should outperform the market in an upturn.

An example of such a stock is Prudential (LSE: PRU) (NYSE: PUK.US), which has a beta of 1.53. This is significantly above the market value of 1 and shows that, in theory, for every 1% gain in the value of the wider index, Prudential’s share price should increase by 1.53%.

This means that if 2014 proves to be another strong year for the market, Prudential could be one of the major winners.

Of course, what is given with one hand can be taken with the other, as a 1% fall in the wider market should mean (in theory) that Prudential falls by 1.53%.

So, a good run by the stock market should be good for Prudential, while a bad run may prove to be anything but.

In addition to offering an above-average beta, Prudential also offers a very impressive dividend per share growth forecast. Indeed, dividends per share are expected to increase from 29.2p last year to just over 37p in 2015. This is an annualised increase of 8.1% and shows that, although shares currently yield just 2.2%, this figure could grow significantly over the next few years.

Therefore, with an above-average beta that offers the scope for Prudential to have an even better year than the wider stock market, as well as dividends per share that are set to grow at more than twice the rate of inflation, Prudential could prove to be a stock that helps you retire early.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Peter does not own shares in Prudential.

More on Investing Articles

Middle-aged black male working at home desk
Investing Articles

Here’s how I’m trying to build up my ISA to earn £10,000 passive income each year

I've been working to build some passive income for my retirement for years. Here's how I'm using the stock market…

Read more »

Elevated view over city of London skyline
Investing Articles

Could this 5.8%-yielding FTSE 250 share storm back in 2025?

Christopher Ruane weighs some pros and cons of a FTSE 250 share he owns that has had a rough few…

Read more »

British union jack flag and Parliament house at city of Westminster in the background
Investing Articles

Kier Starmer aims to make the UK an AI superpower! 2 FTSE stocks are poised to benefit

This pair of FTSE stocks look set to benefit long term as the UK government plans to tap into the…

Read more »

British Pennies on a Pound Note
Investing Articles

Was this penny stock a silly purchase?

This penny stock has fallen in value by over half in the past five years. Here our writer explains why…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

After a stunning 2024, could IAG shares still go higher from here?

Christopher Ruane explains why he sees some grounds for optimism that IAG shares could move even higher -- and whether…

Read more »

Investing Articles

Searching for passive income? Here are 2 top dividend growth shares to consider!

These FTSE 100 and FTSE 250 dividend shares are tipped to lift dividends over the next two to three years,…

Read more »

Investing Articles

Should I buy 29,761 shares in this FTSE 250 dividend REIT for £1,000 a year in passive income?

Stephen Wright's wondering whether it's a good idea to buy shares in a FTSE 250 REIT with a highly reliable…

Read more »

Dividend Shares

A 12.65% yield? Here’s the dividend forecast for this FTSE income share

Jon Smith talks through the2026/27 dividend forecast for an income stock that already has a double-digit yield but could go…

Read more »