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Prudential plc Could Help You Retire Early

How different the investment landscape looks at the start of 2014, compared to the view at the start of 2013!

Certainly, the market seems to be far more confident than it was a year ago, with price-to-earnings (P/E) ratios being upgraded significantly during the year. Although growth figures are yet to hit their much-anticipated heights, they do seem to be moving in the right direction and company expectations seem to be more bullish than for a long time.

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One way to potentially benefit from improved sentiment (and to hopefully make retirement come a little sooner than the government thinks it will for you) is to buy more cyclical, volatile stocks that should outperform the market in an upturn.

An example of such a stock is Prudential (LSE: PRU) (NYSE: PUK.US), which has a beta of 1.53. This is significantly above the market value of 1 and shows that, in theory, for every 1% gain in the value of the wider index, Prudential’s share price should increase by 1.53%.

This means that if 2014 proves to be another strong year for the market, Prudential could be one of the major winners.

Of course, what is given with one hand can be taken with the other, as a 1% fall in the wider market should mean (in theory) that Prudential falls by 1.53%.

So, a good run by the stock market should be good for Prudential, while a bad run may prove to be anything but.

In addition to offering an above-average beta, Prudential also offers a very impressive dividend per share growth forecast. Indeed, dividends per share are expected to increase from 29.2p last year to just over 37p in 2015. This is an annualised increase of 8.1% and shows that, although shares currently yield just 2.2%, this figure could grow significantly over the next few years.

Therefore, with an above-average beta that offers the scope for Prudential to have an even better year than the wider stock market, as well as dividends per share that are set to grow at more than twice the rate of inflation, Prudential could prove to be a stock that helps you retire early.

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> Peter does not own shares in Prudential.

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