19th February 2016
Standard Life has raised its dividend 7.8% as share recovery continues but other insurers remain more attractive.
Standard Life’s full year results reported pre-tax profits of £665million, above analyst consensus, which allowed it to raise its dividend by 7.8% to a total of 18.36p per share.
The final dividend proposed had been 12.34p.
Helal Miah, investment research analyst at The Share Centre, said the insurer was ‘well-run’ and has been shifting its strategy ‘from insurance towards fee-based asset management, which saw revenue increase 10% in the financial year’.
‘The UK business is building on momentum and is well placed to benefit from changes in the UK savings environment. 250,000 customers joined up through auto enrolment in the last year,’ he said.
‘Global expansion continues to support results, with net inflows more than doubling in the period, representing 13% of its opening assets under management.’
When it comes to the shares, Miah said they have ‘made a very good recovery since the financial crisis but currently trade at a forward price/earnings ratio on 13x, compared to the peer group it looks overvalued’.
Due to this overvaluation, Miah believes there are better value insurers out there.
‘We therefore recommend Standard Life as a ‘hold’ for investors willing to accept a medium level of risk. For investors interested in the sector, our preferences are Prudential and Aviva,’ he said.