The Rock of Gibraltar is a famous landmark that can be seen from a distance. The author shares insights on their investment journey, owning 100 stocks in their dividend portfolio. They plan to exit some positions with low dividend growth and reinvest in higher conviction picks, like Prudential Financial.
Prudential recently showed strength in its financial performance, with growth in key segments like PGIM and U.S. Businesses. The company’s international expansion and focus on high-growth markets bode well for future growth. Analysts predict a steady increase in earnings per share over the next few years.
Despite a recent rally in share price, Prudential still seems undervalued based on earnings potential. The company’s balance sheet is strong, with ample liquidity for strategic investments and share repurchases. The author estimates a fair value close to $120 per share.
Prudential’s dividend yield is above the financial sector median, with room for growth due to a healthy payout ratio and strong free cash flow. The author expects 4-5% annual dividend growth in the coming years. However, risks like reputation damage or high insurance claims should be considered.
In summary, Prudential offers safe and market-beating income potential, with an estimated 10% annual total return through 2026. The author maintains a buy rating for the stock.