The Standard Life share price is looking more and more attractive by the day. Bitcoin, by contrast, has dropped off my list. At time of writing, the world’s largest cryptocurrency has sunk through a psychologically important $8,000 support level and is trending further down.
Like any other non-producing asset like gold, you may want to allocate a small proportion of your portfolio to it as a hedge.
But while Bitcoin may offer low correlation to equity markets, I don’t think it will give you the same gains as this quality FTSE 100 dividend stock.
Not bog standard
Investment manager Standard Life Aberdeen (LSE:SLA) is looking mighty cheap right now on a trailing price-to-earnings (P/E) ratio of 9. Any lower and I’d be wary, but this one is right in my sweet spot.
More so when you see its whopping 8% dividend yield.
Last year the stock paid an 8.4% dividend, but it wasn’t covered by earnings, and its 2018 pre-tax profits slipped from £660m to £650m. I’m not particularly concerned about this, because assets under management are increasing, up to £577bn at last count.
This time around Standard Life has a dividend cover of 1.4, which is well within sustainable guidelines.
Stay in charge
The loss of Martin Gilbert as he retires as vice-chairman in September 2020 is certainly a blow. But over the last 30 years Gilbert has built the firm from a small player to a truly globally diversified enterprise.
The 2017 merger between Aberdeen Asset Management and Standard Life that produced the FTSE 100 company we know today now has Keith Skeoch as CEO. He points investors to SLA’s “strong balance sheet…and ability to invest in innovation…” saying the company was “well placed to deliver value and sustainable returns for our shareholders.”
City analysts think Standard Life’s earnings per share will increase from 17.8p in 2018 to 18.5p this year. If the share price stays in the current range, that means an attractive forward P/E ratio of 15.
Who to buy
You can tell by looking at their stock market disclosures that SLA is taking long positions in solid British companies. Bosses recently increased their holdings of FTSE 250 firms Inmarsat, the satellite telecoms firm, and defence company Cobham.
Going back through October I can see that also on the shopping list have been the London Stock Exchange — a solid move after the Hong Kong bourse made an unsolicited takeover attempt — along with strong, profitable growers like Just Eat.
Make money work harder
I want to start off 2020 with a good investing plan that my future self will thank me for. I want my money to be beavering away in the background, making me richer while I sleep.
There’s a nifty accounting principle called the Rule of 72, which helps quickly calculate how long it will take to double your money with compound interest. Just divide the interest rate into 72. Standard Life Aberdeen is offering 8%. Divide that into 72, and you get 9 years.
9 years to double your money. And this is just one dividend stock. Choose a couple of other good FTSE 100 dividend-paying prospects and you’ll be well on your way to a richer life.