This solid FTSE 100 stock pays out 7% a year in cash. I’d buy this share today!

first_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Image source: Getty Images. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. When I was a lad in the 70s, one of the frequent visitors to our area was ‘the man from the Pru’. He was one of thousands of agents collecting small, weekly insurance premiums on behalf of FTSE 100 giant Prudential.A new FTSE 100 memberThe Pru has changed a lot over the decades, on its way to becoming a £31.7bn FTSE 100 heavyweight. Most recently, on 21 October last year, the Pru demerged investment manager M&G (LSE: MNG), which itself joined the FTSE 100 at the next reshuffle.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…M&G on its own is a formidable business. The savings and investments firm has more than five million retail customers and 800 institutional clients in 28 markets. Its two main brands, Prudential and M&G Investments, are household names almost worldwide.A small FTSE 100 firm takes a diveAs I write, M&G shares trade just below 170p, having risen 2% on Friday. This values the investment manager at £4.4bn, placing it among the 25 smallest members of the FTSE 100 by size. But they say that small is beautiful and, when it comes to M&G, I agree.Since listing 10 months ago, M&G shares peaked at 245.9p on 19 February, before brutally plunging to just 84.1p on 18 March. Frankly, at below 85p, I think they were the bargain of the century, which is why they have doubled since those dark days.M&G shares are cheap as chipsEven though M&G shares are up over 100% from their all-time low, I still see obvious value in this FTSE 100 stock. For example, they trade almost a third (30.9%) below their February high, so they’re far from their peak.What’s more, when you crunch the numbers on M&G shares, they look insanely undervalued. Right now, they trade on a price-to-earnings ratio of 4.16, for an earnings yield of a whopping 24%. The dividend yield is a bumper 7%, covered 3.43 times by earnings.In other words, this FTSE 100 share makes 24% a year, pays 7% of this in cash to shareholders and then reinvests the remaining 17% back into the business. With returns this dizzyingly high, I feel that M&G shares shouldn’t be 170p for much longer.M&G has weaknesses – and strengthsOf course, if M&G’s future was blindingly bright, its shares wouldn’t be among the lowest-rated in the entire FTSE 100. In the investment business, fat margins are being eroded as investors switch from high-fee managed funds to low-cost trackers.But M&G’s strength as a fixed-income asset manager is also supported by the extreme profitability of its run-off legacy insurance business. Also, M&G’s Solvency II ratio of 168% demonstrates its financial strength. Furthermore, as the FTSE 100 and other indices recover, the firm’s assets under management will grow.While it’s hard to see bumper growth from M&G, it makes a strong case as a cash generator and dividend dynamo. Few investors could get excited about this FTSE 100 share, but that’s my point. It’s a boring business that will produce a torrent of cash over the coming decades. I’d happily buy and hold its shares today to grab a share of these future billions! “This Stock Could Be Like Buying Amazon in 1997” Cliff D’Arcy | Saturday, 8th August, 2020 | More on: MNG Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! This solid FTSE 100 stock pays out 7% a year in cash. I’d buy this share today!center_img Simply click below to discover how you can take advantage of this. Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has recommended Prudential. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. 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