I believe the future remains very bright for insurance mammoth Prudential (LSE: PRU) despite the prospect of near-term earnings trouble.
'The Pru' has a long and proud record of generating sound bottom-line expansion year after year, although current market volatility in the US is expected to end this splendid run. Indeed, the City expects this to create a 9% earnings dip in fiscal 2016.
Still, I'm convinced the company's prospects in the coming years remain rosy, particularly as business levels take off in Asia. Prudential saw operating pre-tax profit from the region leap by almost a fifth between January and June, for example, to £682m. And surging disposable incomes in these regions should continue to power financial product demand to the stars.
My bullish take is shared by the City, and a 14% earnings jump is forecast for 2017 alone. With the FTSE 100(INDEXFTSE: UKX) colossus anticipated to get back onto the straight and narrow sooner rather than later, I reckon a forward P/E ratio of 12.5 times, some distance below the big-cap average of 15 times, represents spectacular value.
And against this exciting outlook, the insurance play is anticipated to raise 2015's dividend of 38.78p per share to 41.3p this year and to 45p in 2017.
While these figures may result in chunky-if-unspectacular yields of 2.9% and 3.2%, I expect Prudential's splendid revenues outlook and ability to create shedloads of cash to keep delivering meaty dividend growth long into the future.
A smoking selection
Like Prudential, the huge opportunities afforded by growing wealth levels and rising populations in emerging regions make Imperial Brands (LSE: IMB) a combustible growth prospect too.
The London tobacco titan has identified a number of key markets across Asia, Africa and Eastern Europe to deliver stunning earnings expansion in the years ahead. Indeed, huge territories like Russia, Turkey, Saudi Arabia and Vietnam -- places where Imperial Tobacco commands less than 15% of the total market -- have been identified as particular growth hotbeds.
Developing territories aren't the only game in town, however, and Imperial Tobacco has set the US up as a terrific growth market in its own right. And the acquisition of Reynolds American's brands like Winston and Salem last year has significantly bolstered the firm's position in the world's largest tobacco market.
The star power of Imperial Brands' labels is helping the company to mitigate the structural decline in cigarette volumes. But the company is also devoting vast sums to the fast-growing e-cigarette sector, a market currently serviced through its blu devices. And opportunities in the rising caffeine strip market are also being explored.
Imperial Brands' strong position in old and new product markets is expected to deliver earnings expansion of 15% and 12% in the years to September 2016 and 2017, driving a reasonable forward P/E rating of 16.2 times to a terrific 14.5 times for next year.
And when you throw in projected dividends of 154.7p and 170.8p per share for these periods -- yielding 3.9% and 4.3% respectively -- I reckon Imperial Brands is a brilliant defensive pick at current prices.
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Royston Wild has no position in any shares mentioned. 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.