I’m optimistic about the prospects for the financial services sector, which is why I’m taking a closer look at the outlooks of Barclays PLC (LON:BARC) (BARC.L), Royal Bank of Scotland Group plc (LON:RBS) (RBS.L), Prudential plc (LON:PRU) (PRU.L) and Legal & General Group Plc (LON:LGEN) (LGEN.L).
Barclays seems to have a stronger future than its recent past. Its shares have been relatively volatile over the last couple of years, with macroeconomic conditions and regulatory risk seeming to weigh on investor sentiment.
However, with what seems to be an improved business model following its restructuring, the company could generate excess capital in future. This may cause the Barclays share price to become increasingly appealing to investors due to its income potential, with a 4% forward yield being relatively high in my eyes.
RBS continues to experience challenges dating back a number of years. They could hold back investor sentiment to some degree over the medium term, although its underlying performance continues to improve.
With RBS having a forward dividend yield of over 4%, it could offer good value for money compared to a number of its industry peers. With the potential for improved trading conditions as global growth looks set to continue, it could perform better than many of its FTSE 100 peers in my view.
Prudential’s business has gone from strength-to-strength in recent years in my opinion. The company has been able to put in place what seems to be a balanced growth performance, with a focus on Asia seeming to represent a large part of its future prospects.
With wage growth continuing to be high, Prudential’s focus on Asia could increase over the coming years. Alongside a restructuring, this could improve its investment potential for the long run.
Legal & General’s business model and strategy seem to be sound in my opinion. While it may lack the growth potential of some of its financial services peers, it has a 6% dividend yield and seems to offer good value for money.
With Legal & General not being a particularly exciting stock, it may continue to go under the radar of a lot of investors. But with a PE ratio of around 11, it seems to offer good value for money.