We recently compiled a list of the 10 Best FTSE Dividend Stocks To Buy Now. In this article, we are going to take a look at where Prudential Financial, Inc. (NYSE:PRU) stands against the other FTSE dividend stocks.
The first half of 2024 has been notable for the UK equity market, as the FTSE 100, the benchmark index for UK company shares, hit a record high. However, stocks tumbled in the first week of June as financial shares mirrored broader losses in European markets. That was mainly due to the political uncertainty that unsettled investors and a slump in industrial mining stocks further dragged down the market. That said, with some time remaining in the general elections, there is still some potential for additional developments and surprises within the UK market. The index is up by nearly 6% this year so far, compared with a 14.3% return of the broader US market
The Bank of England (BoE) was one of the first central banks to begin increasing interest rates after the peak of the COVID pandemic. From December 2021 to August 2023, it raised the bank rate by 515 basis points to a 16-year high of 5.25% in order to address rising inflationary pressures in the economy. According to a Reuters poll of economists, the BoE is expected to begin cutting interest rates in August. Most economists also anticipate at least one more rate reduction this year, despite ongoing high inflation in wages and services. Yael Selfin, chief UK economist at KPMG, made the following comment on the situation:
“While we are seeing some tentative signs of cooling in the labor market, service sector inflation remains persistently high and it is likely the MPC would want to wait until the next set of forecasts and a few more data points before it embarks on its first rate cut.”
Overall, UK inflation is expected to remain slightly above the BoE’s target of 2.0% in every quarter until at least the end of 2025, according to the poll. Median forecasts indicated that inflation would average 2.5% this year and 2.2% next year.
After reaching new highs in 2024, the FTSE 100 may attract more investors, particularly those focused on income accumulation. The projected dividend yield of 3.8% for 2024 and 4.1% for 2025 is appealing, especially since these yields surpass the current inflation rate. Analysts predict that the ten largest dividend-paying companies in the UK will return £43.9 billion to shareholders, accounting for 55% of the total dividends from the FTSE 100. The top 20 companies are expected to contribute £57.4 billion, making up 72% of the total dividends.
In 2023, UK dividend growth of 5.4% aligned with the global average, according to a report by Janus Henderson. This increase was driven by substantial dividend increases from banks and oil producers, although it was tempered by lower payouts from mining companies. The report further mentioned that annual dividends in the UK grew to $86 billion in 2023 from over $63 billion in 2020.
While investors gravitate toward American dividend stocks, some of the best FTSE dividend stocks also offer similar investment opportunities.
Our Methodology:
For this article, we scanned through the list of FTSE stocks and picked dividend stocks from the list. From the resultant dataset, we picked the 10 best FTSE dividend stocks with the highest number of hedge fund investors tracked by Insider Monkey as of Q1 2024. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A financial advisor sitting with a customer in a living room discussing their financial future.
Prudential Financial, Inc. (NYSE:PRU)
Number of Hedge Fund Holders: 33
Prudential Financial, Inc. (NYSE:PRU) is a multinational insurance company that provides services in life and health insurance and asset management. Last month, Jefferies upgraded the stock to Buy, highlighting the company’s annuity leverage. The firm believes that the company’s involvement with Prismic, a life and annuity reinsurer it helped establish, could boost the stock. Since the start of 2024, the stock is up by nearly 11% and its 12-month return stands at over 37%.
Prudential Financial, Inc. (NYSE:PRU)’s recent quarterly earnings fell short of expectations, however, the company’s global investment management business, PGIM, performed strongly. Market gains and $26.6 billion in net inflows led to a 6% year-over-year in assets under management, surpassing $1.3 trillion. This growth boosted asset management fees and related revenue, despite higher expenses. As a result, for the first quarter, PGIM’s pre-tax adjusted operating income rose by nearly 12% on the year to $169 million. In addition, the company maintained its focus on becoming a faster-growing, more capital-efficient, and agile company by expanding its market-leading business.
Prudential Financial, Inc. (NYSE:PRU) is one of the best FTSE dividend stocks on our list due to its steadfast dedication to shareholder returns. In the first three months of the year, the company returned $726 million to shareholders, including $476 million in dividends. Moreover, it has been raising its payouts consistently for the past 16 years. The company’s quarterly dividend currently comes in at $1.30 per share for a dividend yield of 4.5%.
Prudential Financial, Inc. (NYSE:PRU) is adept at strategically diversifying its investment portfolio. This was seen when the company expanded into alternative assets, acquiring Deerpath Capital last year. In its recent earnings call, the CEO also mentioned that the company is diversifying its product range in Japan. Moreover, Prudential’s recent announcement about selling its business in Argentina indicates a shift toward focusing on fewer high-growth emerging markets. Through this, the company would be able to concentrate on scaling its business more effectively compared to the broader approach. Prudential Financial, Inc. (NYSE:PRU) has a forward P/E of 8.69, which shows that the stock is relatively cheap given its strong earnings, high yield, and solid operating performance. We have also seen an increase in insider buying activity for the stock.
As per Insider Monkey’s database, 33 hedge funds owned stakes in Prudential Financial, Inc. (NYSE:PRU) at the end of March, up from 32 in the previous quarter. These funds own around $543 million worth of stock.
Overall PRU ranks 5th on our list of the best FTSE dividend stocks to buy. You can visit 10 Best FTSE Dividend Stocks To Buy Now to see the other FTSE dividend stocks that are on hedge funds’ radar. While we acknowledge the potential of PRU as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PRU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
