Hopes for dividend hike at Prudential may be misplaced
PRUDENTIAL chief executive Mark Tucker will try to quit the insurer on a high by boosting its dividend when it reports interim results this Thursday.
Analysts at Deutsche Bank have fuelled hopes the group will boost the payout from 6p to 6.3p a share, as popular leader Tucker prepares to hand over to current finance director Tidjane Thiam in September on a positive note.
However, analysts at ING have warned markets not to bank on a dividend boost, saying Prudential’s dividend may actually be cut amid a lack of available cash at the firm.
ING’s Kevin Ryan said the Pru is one of the best-capitalised insurers in Europe but it does not generate enough cash to ensure the money for the dividend will be available.
He said any signs of weakness at the firm’s US arm in particular could force Tucker to disappoint markets with a dividend cut. “Any hint that the US business will not be able to remit its usual cash dividend to the centre would leave the dividend vulnerable,” he said in a research note.