Chesnara PLC (LSE:CSN) aims to be the “least troublesome source of sustainable, attractive dividend yield” and Hardman Research believes it is largely succeeding in this aim.
With a price at about two-thirds of its economic value, Chesnara seems undervalued, the research house said. A prospective dividend yield of 8.1%, with good prospects of continued growth, also suggests an undervalued stock, it added.
The headline figures in the life assurance and pension company’s full-year results were good, Hardman said, but not without some blemishes.
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“Operational variances showed the effect of the challenges to the Swedish business, in particular, although their negative contribution of £32.6mln was a distinct improvement on the £49.9mln loss in 2020,” Hardman noted.
“On the balance sheet, the growth in Economic Value was offset by adverse movements in exchange rates; net, it shrank by 2%,” it added.
Since the announcement of the results at the end of March, the company has completed the acquisitions of Sanlam and Robein Leven, while earlier in the year the company issued a £200mln loan note at 4.75%, which to Hardman signals that management is confident of finding more transactions in the future.
“In our opinion, the discount to Economic Value looks wider than it should, and the yield appears high for a dividend that is both secure and growing,” Hardman concluded.