Wow – I dodged a bullet with this FTSE 100 development inventory. I banked a 70% revenue simply earlier than the 2008 monetary disaster, then forgot all about it. I can’t keep in mind why I offered, however I’m glad I did!

I’m speaking about life insurer Prudential (LSE: PRU). At this time, its shares commerce at 720.8p. That’s the bottom degree since November 2012, virtually a dozen years in the past.

Three years in the past, the Prudential share price was flying excessive at 1,545p. It’s been falling ever since and might’t appear to cease. It’s down 30.91% over 12 months.

This was alleged to be probably the most thrilling insurance coverage shares on the FTSE 100, making the most of a generational alternative by shifting its operations to booming Asia, with headquarters in Hong Kong and operations throughout China.

FTSE 100 straggler

This gave UK traders the arrogance of a home itemizing and stable guidelines on company governance, mixed with publicity to the world’s second-biggest economic system. What might go mistaken?

Quite a bit, really: politics, property, shadow banking, youth unemployment, commerce wars, authoritarianism, Taiwan… Chinese language Premier Xi Jinping now faces a bunch of issues, lots of his personal making.

But the Prudential enterprise appears effective. Full-year 2023 outcomes confirmed enterprise earnings up 45% to $3.125bn. Adjusted working revenue rose 8% to $2.893bn. The board hiked the full-year dividend 9% to twenty.47 US cents per share.

Final month, CEO Anil Wadhwani mentioned Pru would return $2bn to traders through a share buyback between now and mid-2026. He additionally mentioned the 2024 annual dividend to develop within the vary of seven% to 9%.

That’s necessary, as a result of the headline yield has been across the 2% mark for so long as I can keep in mind. At this time, it’s yielding 2.29%, properly beneath FTSE 100 common of three.7%. And for as soon as, we will’t blame that on a rising share price!

Good discount?

Its dividends took a beating throughout the pandemic, and are solely now beginning to get well. Let’s see what the charts say.

^{Chart by TradingView}

It’s been a tricky time for FTSE 100 insurers usually, with Authorized & Basic Group, M&G, and Phoenix Group Holdings all struggling share-price sensible. However no less than these three supply whopping yields of 8% or 9%. Pru doesn’t.

The Chinese language economic system is selecting up and will hit its 5% GDP development goal. That might persuade traders to take a second have a look at the Pru. They’ll be impressed by its low valuation. I used to be, anyway. At this time, Prudential shares commerce at simply 10.76 occasions earnings, beneath the FTSE 100 common of 12.7 occasions.

Prudential isn’t a pure-play China inventory — it’s doing properly in Thailand and India, and has its sights set on Africa. It appears to be like like an excellent restoration alternative, presumably top-of-the-line on all the FTSE 100.

The hazard is that it’s appeared like an excellent alternative for years, with out coming good on its promise. It’s now on my watchlist, although. When I’ve money to speculate, I’ll give it a second shot.