HomeInvestingThe M&G share price looks far too low to me!

The M&G share price looks far too low to me!

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Earlier than I begin discussing the M&G (LSE: MNG) share value, I’ll start with a fast recap of current inventory market strikes.

At current, the UK’s FTSE 100 index hovers simply 0.3% under its 52-week excessive — and an analogous degree beneath its all-time intra-day excessive of 8,047.06 factors, reached on 16 February 2023. In the meantime, the US S&P 500 index stands 5.4% under its document excessive of 5,264.85 factors, hit on 28 March.

M&G shares slip

As one of many UK’s main asset managers, M&G’s success is intently tied to the costs of varied monetary property, notably shares and bonds.

Thus, with UK and US share costs near document highs, this needs to be excellent news for this established agency, based in 1931. Nevertheless, M&G’s share value has been on the slide currently, falling again from highs seen simply final month.

As I write, M&G inventory trades at 203p, valuing this FTSE 100 monetary agency at £4.8bn. Simply over a month in the past, the shares hit a one-year excessive of 241.1p on 21 March. Therefore, they’ve slid 15.8% from this current peak.

Right here’s how this Footsie share has carried out over six totally different timescales:

5 days +1.8%
One month -14.9%
Six months +4.1%
YTD 2024 -8.7%
One yr +0.4%
Since flotation -7.7%
*These figures exclude dividends.

Over the previous yr, M&G shares have barely budged, whereas they’ve misplaced practically 8% of their worth since floating at 220p every on the London inventory market in October 2019.

Dividends matter

For the document, my spouse and I personal M&G inventory as a part of our balanced, diversified household portfolio. We paid 199.6p a share for our holding in August 2023. So far, now we have made a tiny paper revenue of 1.7% thus far.

Nevertheless, the above returns all exclude money dividends, that are mighty beneficiant from M&G and several other of its asset-management friends. Proper now, this inventory presents a market-busting money yield of 9.7% — means forward of the 4% on supply from the broader FTSE 100.

Additionally, M&G shares pays a money dividend of 13.2p a share on 9 Might, after the inventory went ex-dividend on 28 March. This payout accounts for a lot of the autumn within the share value since its peak a month in the past.

For me, this UK inventory seems undervalued at the moment, due to its near-10% money yield. Nevertheless, as I mentioned earlier, M&G’s future is tied to monetary asset costs. If share and bond costs crash exhausting — as they did in 2022 — then the group’s revenues, earnings, and money circulation may take a giant hit.

Regardless of this, as long-term traders, my spouse and I are on board for the long term — no matter short-term volatility within the M&G share value!


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