Berenberg has flagged up the income potential of the fund manager M&G PLC (LON:MNG) as it repeated its ‘buy’ advice and increased its price target by 38p a share to 238p.
It pointed out (presumably to bargain hunters) the stock is currently trading on a miserly 8.2-times 2022 predicted operating earnings per share.
Those with a liking for a decent pay-out will be more than impressed by the 9.9% dividend yield – which is probably around double the Footsie average.
“Given the £995mln cash generation, the solvency ratio of 182% and the prudent positioning of the investment portfolio, we believe that the market’s perceived risk to the dividend is overstated,” the German investment bank said in a note.
“Assuming less pandemic-related uncertainty by the interim results, we have marginally increased our DPS [dividend per share] estimates using 5% growth, in line with other UK life names.”