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)

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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.


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.

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