Over the past five years, Prudential has been on a growth spurt. The company, which is synonymous with life insurance in the UK, has shifted its attention to Asia, where management sees much more potential for growth.
This shift has yielded fantastic results. Analysts are expecting the company to report earnings per share of 159p in 2019, up 59% from 2015’s figure of 101p.
As earnings have grown, dividends have also ticked higher. The per share distribution to investors has increased at a compound annual rate of 10% over the past six years and, today, the stock yields 3.5%. That isn’t particularly attractive compared to the market average of 4.7%, but if the distribution continues to grow as it has done in the past, investors buying today can look forward to a yield on their original investment of 7% by 2025.
Shares in this income and growth champion are changing hands today for just 10.6 times forward earnings, a valuation that I think is too good to pass up.
Another company I would invest in is mining giant Glencore (LSE: GLEN). As the world’s largest commodities trader, Glencore has become an integral part of the global economy and I don’t see this changing anytime soon.
Even though the company is being attacked for its stance on coal mining and involvement with some curious characters in the business world, I think the group’s long-term outlook is bright because the world’s demand for key commodities such as copper and rare earth metals is only increasing.
As well as favourable economic tailwinds, I think Glencore also makes a great investment because its CEO and founder Ivan Glasenberg remains the company’s largest shareholder… so it’s in his best interests to always act with shareholders in mind.
Today, you can snap up shares in this global commodities behemoth for just 10.5 times forward earnings. The stock also supports a dividend yield of 5.1%, and analysts expect this yield to hit 5.7% by 2020.
Best of the best
Once the poster child of the UK manufacturing industry, Rolls-Royce’s star has fallen over the past few years as the group has struggled to deal with some serious operational and manufacturing issues. However despite these issues, the company remains one of the biggest manufacturers of jet engines in the world (the market is dominated by only two companies, Rolls-Royce and General Electric).
And after years of restructuring, analysts are finally expecting the firm’s efforts to pay off in 2019. The City believes the company can earn £471m in 2019, followed by £706m in 2020, which translates into earnings per share of 26p and 39p for each year, respectively. These forecasts put the shares on a forward P/E of 34 for 2019, which isn’t particularly cheap. Still, considering Rolls’ strong brand value and projected growth over the next two years, I think it is worth paying this premium to get your hands on the shares.