3 Finance Stocks Set To Post Stunning Returns: Banco Santander SA, Brewin Dolphin Holdings plc And Prudential plc

Now could be a perfect time to buy Banco Santander SA (LON: BNC), Brewin Dolphin Holdings plc (LON: BRW) and Prudential plc (LON: PRU)

| 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.

Santander

Over the course of the next year, Santander (LSE: BNC) (NYSE: SAN.US) is expected to increase dividends per share by 7%. That’s a very appealing rate of growth – especially when you consider than interest rates in the UK are forecast to remain at or near historic lows over the medium term. As such, Santander’s forward yield of 3.5% could hold considerable appeal – especially if it continues to increase dividends at a rapid rate.

Encouragingly, Santander’s payout ratio is rather modest. Of course, it slashed dividends this year and this now means that it pays out just 40% of profit as a dividend. This provides it with significant scope to increase dividends moving forward, which could act as a catalyst on its share price over the medium to long term.

In addition, Santander’s price to book (P/B) ratio of just 1.2 indicates that its shares offer great value, as well as top notch income potential.

Brewin Dolphin

Shares in investment management company, Brewin Dolphin (LSE: BRW), fell by over 9% today even though it reported impressive half year results. For example, discretionary funds under management increased to £26.2bn from £24bn at the end of its previous financial year, with its £37.9m pretax profit being significantly higher than the £22m reported in the same period last year. Furthermore, Brewin Dolphin continues to successfully transition to a stronger business model, although the pace of this transition appears to be somewhat slower than many investors were hoping for.

Still, Brewin Dolphin is forecast to increase its bottom line by 12% this year, and by a further 19% next year. This puts it on a price to earnings growth (PEG) ratio of just 0.8, which indicates that its shares could continue to rise even though they are up a whopping 144% in the last five years. Therefore, while today’s share price fall may put off shorter term buyers, for long term investors it presents a very appealing opportunity to buy in at a great price.

Prudential

With the future of the FTSE 100 being relatively uncertain at the present time due to the potential for the UK to leave the EU and the impact of interest rate rises, investors may begin to seek out stocks with top notch track records. One such company is Prudential (LSE: PRU). For example, over the last five years it more than doubled net profit, with dividends also increasing at a similar pace. This could lead to its shares trading at a premium, as investors begin to view Prudential as a relatively safe bet.

Looking ahead, its share price could rise significantly, since Prudential is expected to increase its earnings by a further 28% over the next two years. As such, and while it does have a relatively high price to book (P/B) ratio of 3.6, now seems to be a great time to buy a slice of Prudential, with a change in management also likely to bring fresh ideas and impetus to its future financial performance.

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 Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

The flag of the United States of America flying in front of the Capitol building
Investing Articles

2 UK shares that could rise if Trump wins the Presidential election

These UK shares are among the FTSE 100's most popular stocks. And they could rise in value if Donald Trump…

Read more »

Closeup ruffled American flag representing US stocks and shares
Investing Articles

2 UK stocks that could rise if Harris wins the Presidential election

Royston Wild believes these UK stocks could receive a bump if Kalama Harris wins the Presidency, giving their share prices…

Read more »

Investing Articles

After a 96% plunge, is buying more Aston Martin shares throwing good money after bad?

Just two weeks after buying Aston Martin shares Harvey Jones found himself nursing a painful loss. Yet after recent news…

Read more »

Investing Articles

After crashing 45% in October, should I buy this FTSE 250 share for my Stocks and Shares ISA?

Roland Head explains why he’s tempted to add this risky FTSE 250 turnaround share to his Stocks and Shares ISA…

Read more »

Investing Articles

Could I use a stock market crash to turn £20k into half a mil in just over a decade?

A stock market crash might sound terrifying to some but it can also present a once-in-a-lifetime opportunity to accumulate generational…

Read more »

Investing Articles

Recently released: October’s small-cap stock recommendation [PREMIUM PICKS]

We believe the UK small-cap market offers a myriad of opportunities across a wide range of different businesses and industries.

Read more »

Investing Articles

Here’s how a Stocks and Shares ISA and Lifetime ISA could supercharge my wealth!

Individual Savings Accounts (ISAs) can help UK share investors take their earnings to the next level. And their importance is…

Read more »

A person holding onto a fan of twenty pound notes
Investing Articles

A high-yield dividend ETF and an investment trust to consider this November!

Investors wanting to boost their passive income could benefit from investigating these high-yield funds and trusts, says Royston Wild.

Read more »