Diversify By Investing Into Prudential Financial's $4.60 Annual Dividend
- Diversify any portfolio's sourcing of cash flow by investing into a rock-solid 4.13% yield.
- Get paid $1.15 per share next quarter for holding this stock that is on schedule to double again.
- This powerhouse insurer already doubled in price per share since 2020 and is set to continue accumulating long-term gains.
Prudential Financial, Inc. (NYSE:PRU) offers a $1.15 quarterly dividend, a pay out to shareholders that has grown for seven consecutive years. The company has added $15 billion to the top line since 2011 and it only makes sense to pass those gains on to the shareholders in the form of dividends and stock buybacks.
Prudential has been a leader in the insurance industry since 1875. The company began its life with a twelve year head-start on competitors Manulife Financial Corporation (MFC) and an eighty year head-start on Aflac Incorporated (AFL), which explains why Prudential is the most highly valued among these two well-known peers.
Securing Capital Returns To Shareholders With $515 Million Run-Rate Cost Savings
Chairman and CEO Charlie Lowrey explained in the 2nd Quarter Conference call that the company's cost-savings programs are progressing well,
To date, we have achieved 515 million of run-rate cost savings, which exceeded our original target of 500 million, and did so 18 months ahead of plan. These savings include $130 million in the second quarter and a total of 240 million for the first half of 2021. We've also identified new cost savings to replace those we had not yet realized in our full-service retirement business. And as a result, continue to expect to generate $750 million of cost savings.
Investors can expect that as revenues grow, costs will be kept down, enabling further growth in dividend payments to shareholders.
International Expansion To Offset US Dollar Inflationary Pressure
Prudential is overflowing with capital to redeploy and management, after weighing the potential for return on investment versus capital distributions, is selling its full-service retirement business in order to invest more heavily into a programmatic M&A approach that has allowed the company to break into higher-growth markets in Africa's Kenya, Tanzania, and Uganda.
If expanding into Africa adds unwanted uncertainty to the business, investors need not worry. The growing $1.15 quarterly dividend is secured by the company's diversified investment portfolio which in 2020 received $4.5 billion in quarterly interest and dividend income. The steady dividend to shareholders is paid out mostly from the ultra-safe government and corporate bonds held in Prudential's investment portfolio.
Surprise Upside Potential From Prudential's More Aggressive Small Bets In Venture Capital
There are additional opportunities for the company to surprise to the upside as the deft hand of management has established an operating Venture Capital program. It is well known returns on venture capital are among the best of all possible avenues for capital deployment.
VC returns are often lumpy, and only come along on multi-year timelines, so it's good for shareholders to have the opportunity of the venture component tied to the regular quarterly dividend well-secured by the steady insurance businesses operated by Prudential Financial.
How To Lock-In This Growing 4.13 Yielder
In August, investors applauded Prudential's earnings report with a $10 gain per share. The company's track record of growth in price per-share since 2020 has seen the stock price double:
If share price momentum continues over the next year, doubling the per-share value of Prudential once again, and the dividend growth remains at its steady 10.20% CAGR, there won't be another opportunity to buy this stock at the sought after 4.13% annual yield for at least seven years (when the $1.15 per share quarterly payout doubled again).
The Wrap & Alternative Investment Opportunities
Prudential has been one heck of a performer over the past year. For investors who have their eye on a rock-solid dividend payment there may be no need for alternative opportunities.
However, all things considered, and with some lean toward capital appreciation, my favorite alternative total return investments with comparably fat dividend payouts are AT&T (T) under $30 and The Kraft Heinz Company (KHC) under $40.
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