Prudential(LSE: PRU) has outperformed almost all of its peers over the past five years. From June 2010 to date, the companys shares have returned more than 200% excluding dividends.
Over the same period, earnings per share have roughly doubled, and the company has hiked its dividend payout by 70%. Prudential has outperformed the FTSE 100 by 169%, excluding dividends since 2010.
This performance is set to continue.
During 2015, City analysts expect the companys earnings per share to expand by 15%. Earnings growth of 11% is expected for 2016. Whats more, according to forecasts, Prudential is expected to hike its dividend payout by 10% per annum for the next two years.
However, it remains to be seen if Prudential can actually hit these lofty growth targets.
Prudentials growth during the past five years has been driven by the groups now ex-CEO Tidjane Thiam, one of the most respected financiers in the City.
Under Thiam, Prudential refrained from chasing sales growth. Instead, the business remained selective in choosing its customers, and this strategy has paid off. A well-timed expansion into the Asian insurance market also helped.
Thaim has now been replaced by Mike Wells, who earned his stripes at one of Prudentials US divisions. And if Wells sticks to Thiams strategy, Prudential has a bright future ahead of it. Prudential should benefit from the growth of Asias middle class over the next few years.
Legal & General(LSE: LGEN) hasnt quite been able to chalk up the same performance as Prudential over the past five years, but it has come close.
While the companys shares have outperformed those of Prudential by approximately 30% since 2010, the companys earnings per share have only increased by 33% over the same period.
Still, Legal & Generals most attractive quality is the companys dividend. At present, the company supports a forward dividend yield of 5%. Over the past five years, the payout has expanded by 180%.
Growth of 10% per annum is expected for the next two years.
Thanks to this growth, if youd brought Legal & Generals shares during 2010, you would now be receiving 15% per annum in dividends alone.
Bigger is better
Lastly,Aviva(LSE: AV). Avivas decision to acquire Friends Life has transformed the group into the UKs largest insurance, savings and asset management company.
This new-found scale should help Aviva dominate the UKs retirement savings market, which is becomingincreasingly competitive.
That said, the retirement savings market continues to grow so Aviva shouldnt have any trouble growing sales. Additionally, Aviva should be able to use its size to lower costs and achieve economies of scale that few other competitors can manage.
but will take time
Unfortunately, it will take time for these benefits from the merger to flow through. City analysts expect Avivas earnings to fall slightly this year before rebounding by 12% during 2016.
Nevertheless, the group is well placed to throw its size about and steal business from competitors when the integration is complete.
Aviva currently trades at a modest forward P/E of 10.5 and supports a dividend yield of 4.1%.
Five more top picks
Along with Aviva, Prudential and Legal & General, there arefive other companiesthat we believe should have a place in every investorsportfolio.
If you’re interested in finding out more about these stocks, we’ve put together a free, no obligation reported entitled, “5 Shares You Can Retire On!“.
There’s no fee for downloading, and the report will be delivered straight away.
What have you go to lose,it’s free!