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£3k to spend? A FTSE 100 dividend growth stock I’d buy and hold until 2030

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Getting exposure to the hot growth regions of Asia is a critical requirement for any growth investor worth his or her salt. Booming population growth and rising wealth levels provide plenty of profits opportunities for many UK stocks, one of which is FTSE 100-listed Prudential (LSE: PRU).

A report released by Alphabet‘s Google, Temasek and Bain & Company underlines just how big the business opportunities are for Prudential in its core marketplaces. The study revealed that, of the near-400m citizens in South-East Asia, just over a quarter of these (104m) are what it describes as ‘fully banked’ and enjoy full access to financial services.

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By comparison, some 98m people are what it calls ‘underbanked’, in other words those individuals who have a bank account but have insufficient access to credit, investment and insurance products. But both of these figures pale next to the 198m citizens who are ‘unbanked’ and hold no financial products at all.

Big plans

It’s no shock, then, that Prudential believes these far-flung regions remain the key to its growth story. In an interview with the Financial Times today Nic Nicandrou, chief executive of the firm’s Asia business, said that the company “will be Asia led” following the demerger of its UK operations as M&G earlier this year.

Elaborating on its plans, Nicandrou said that the continent will be “the preferred destination of capital for the group, whether it’s to branch out into new segments, develop new products and services, build out new relationships [or] develop new rules to market.”

Prudential’s appetite for exploiting this rich market was underlined through fresh acquisition activity last week, its Eastspring asset management division snapping up a 50.1% stake in Thanachart Fund Management for $137m. The move makes Eastspring the fourth-largest asset manager in Thailand with combined assets under management of $21.6bn.

Top value

According to the Brookings Institution, almost 90% of the next billion entrants into the global middle class will come from Asia. And this gives Prudential a lot to look forward to as these individuals seek ways to protect their wealth and their health too (Brookings expects total annual expenditure by Asia’s middle class to hit $37trn by 2030).

Annual earnings at ‘The Pru’ have long danced northwards on account of its booming Asian divisions, and by the looks of things, the bottom line should keep swelling through the next decade at least. And this naturally bodes well for dividends — Prudential raised the full-year payouts 5% in 2018, and thanks to its bright growth outlook and exceptional cash generation said that it plans to continue raising them at this rate.

At current prices, Prudential trades on a rock-bottom forward P/E ratio of 10.2 times and sports a handy 2.5% dividend yield too. It’s a  blue-chip I’d happily buy for my ISA and hold for many, many years.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Prudential. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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