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This FTSE 100 dividend stock is on sale! I’d buy it in an ISA today

The recent news flow over at Prudential (LSE: PRU) hasn’t exactly been brilliant. That doesn’t mean its long-term profits outlook is any less compelling however. And with the FTSE 100 firm now dealing on a rock-bottom forward P/E ratio of 8.5 times, I think it’s worthy of fresh attention.

Asia has been the jewel of the life insurance giant’s crown in recent years. And the emerging nations of the continent form the centrepiece of ‘The Pru’s’ investment case. But sales have dived more recently following the Covid-19 crisis, which emerged in China. Sinking demand there caused total Asian annual premium equivalent (APE) sales to plummet 24% in the first quarter, it announced in May.

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A shocking reversal, sure, but a significant cooldown in revenues was always on the cards. And it’s likely that Prudential will struggle a little longer. The firm has predicted that “we continue to see a challenging sales environment in the second quarter of 2020 as social distancing measures are stepped up in other Asian markets.”

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This is, of course, disappointing news, and I say that as a Prudential shareholder. But it doesn’t take the shine off the Footsie firm’s appeal. Don’t forget the key to successful share investment is to buy equities with a view to holding them for 10 years, or longer. Such a time horizon allows any temporary trading volatility and consequent share price weakness to be minimalised over the long term.

Prudential can still look to Asia with a sense of great optimism. A possible escalation of US and Chinese trade tensions could take a bite out of profits, as could a prolonged hangover from the coronavirus crisis. But that’s not to say this FTSE 100 firm isn’t still in the box seat to record exceptional sales growth in these developing territories.

Insurance product penetration remains extremely low all across the Asian continent. At the same time, personal income levels are likely to keep rocketing while population growth will remain impressive too. This means Prudential can anticipate demand for its life and health insurance policies exploding in the decades ahead, helped by the company’s decision to prioritise capital investment to servicing these economies.

Screen of price moves in the FTSE 100

Dividends to keep rolling

The FTSE 100 firm still has a lot to look forward to in the years ahead then. And in the meantime, it can expect premiums to continue rolling in from existing customers in spite of the near-term economic legacy of Covid-19. History shows that insurance companies like Prudential have more robust revenues in difficult times than most.

These reasons explain why Prudential has decided, unlike many other blue-chips, to keep paying dividends. It has the necessary balance sheet strength to keep shareholder payouts coming, even if difficult economic conditions persist. Its surplus of available capital over required capital clocked in at a whopping $11.1bn as of March.

At current prices, Prudential carries a chunky, inflation-beating 3% dividend yield for 2020. This comes on top of that mega-low earnings multiple of below 10 times too. For ISA investors seeking a bargain, I think it’s far too good to miss.

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Royston Wild owns shares of Prudential. 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.