Happily, my faith hasnt been misplaced. These are two of the best performing stocks on the FTSE 100, growing 242% and 167% respectively over the past five years. Plenty to admire there.
The big question when you see figures like these is whether the companies can maintain their momentum, or whether they have raced ahead of themselves.
I reckon L&G and the Pru still have more juice in the tank.
Both stocks posted bullish half-year results last month. L&G posted an 11% rise in group operating profit to 636m and hiked its dividend 21% to 2.9p.
Thats particularly impressive given the 49% drop in individual annuity sales, followingChancellor George Osbornes decision toscrap the obligation to buy one. Thiswould have been a major blow to many companies, but did little damage to a business as large and diversified as L&G.
Sales of bulk annuity contracts leapt 368% to 3.1 billion, helped by L&G securing the largest ever UK bulk annuity contract, the ICI pension fund.
L&G also boasts assets under management totalling 465bn, up 7%.
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L&G is helped by the fact that its two major markets are the UK and US, both of which have been growing relatively strongly lately.
Demographic trends are also on its side. People need to save more into pensions and other investments, as life expectancy rises and over-stretched welfare states hit a wall.
The downside is that L&G isnt cheap, trading at 15.3 times earnings, against around 13.8 times for the FTSE 100.
As itsshare price has grown, the yield has slipped to 2.9%, although that recent 21% hike suggests there is plenty of scope for progression.
Prudential has also cashed in on the US recovery, while recent struggles in emerging markets have done little to dent its rapid expansion plans in Asia. Its recent half-year results showed a mighty 17% rise in operating profits to 1.52 billion. New business profits exceeded 1 billion.
Again, the demographic trends are favourable, also in Asia, where the middle class is emerging, and ageing.
Prudential hiked its dividend by a generous 15% to 11.19p a share. Despite that, the yield is now relatively lowly 2.42%. Thats the price you pay for success, along with a valuation of 17 times earnings.
Much of that valuation will be based on Prudentials ambitious Asian growth prospects, but giving its success in hitting all its targets in recent years, this is a price worth paying.
Its too much to ask for these two insurers to repeat the rampant success of the last five years, but there are good reasons why their outperformance should continue.
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Harvey Jones ownsshares in Prudential. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.