Allianz share: 5 years from now…

that alliance-The share (WKN: 840400) can be completely different today and in five years. Currently, the market is clearly pricing downwards. For example, the Structured Alpha case, which continues to have an impact. Or the market’s general skepticism.

Most recently, it resulted in a share price of 172 euros as I write these lines. Meanwhile, we have even seen a lower rate. This is the starting point, which of course we already know.

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However, I think Allianz stock may be a completely different option five years from now. Let’s look at the valuation, yield, opportunity and heaps more.

Allianz stock in five years: another valuation?

What we can already see today is that the Allianz share’s core business is intact. In the insurance area and without special effects, things have been going well lately. The expectation of the operating result of 13.4 billion euros is not accidental after all, but is fairly close to the insurance company’s previous records.

Based on these metrics, the adjusted price-to-earnings ratio would be less than 10. The price-to-book ratio should also be less than 1. Cheap? Can we put it that way? However, there is the prospect of it becoming even cheaper, which could increase the return potential, especially in the medium to long term.

According to the current expert opinion, there should be further share buybacks for the Allianz share. If management relies on this type of capital return, a consistently declining number of shares outstanding leads to growth in earnings. But there are also organic and inorganic growth opportunities.

In times of rising interest rates, investment performance should improve in the medium term, which can also have a positive effect on earnings growth. Overall, the insurer has shown moderate growth in a few years, possibly thanks to a little bit of pricing. The DAX insurer could continue to grow inorganically through acquisitions. Overall, according to the medium-term forecast, the management sees earnings growth in at least the middle single-digit percentage range.

Significantly more yield…?!

Allianz stock should also offer more dividend potential over the next five years. The dividend policy and forecast anticipates that management will also increase the total payout per share by at least a mid-single-digit percentage through the 2024 payout. As a result, there could be significantly more than the current dividend of 6.5%.

Foolish investors should therefore consider whether there is a large appreciation potential for Allianz shares in the next five years. If the forecasts outlined so far come to pass, the dividend should certainly increase consistently, while the valuation may well be lower.

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Vincent owns shares in Allianz. The Motley Fool does not own any of the stocks listed.

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