If you’re looking for a stock to buy and forget, here are three FTSE 100 stalwarts that should deliver long-term dividends and growth.
Lloyds Is Back
Normality is slowly returning to Lloyds Banking Group (LSE: LLOY) (NYSE: LYG.US), with suggestions that it could be paying dividends and 100% in private ownership within the year.
Lloyds is the ‘back to the future’ bank, as it returns to what it knows best, serving the UK retail market and rewarding loyal investors with lashings of juicy dividends.
True, the UK isn’t exactly booming, with the Bank of England downgrading 2015 GDP growth from 2.9% to 2.5%, with similar revisions to expectations in 2016 and beyond.
But at least Lloyds is a known entity, and one that is forecast to yield 4.8% by the end of 2016.
Trading at 11 times earnings it looks a decent buy with a solid, if unspectacular, future. After the troubles of recent years, that is good enough for me.
Glaxo Will Go
News that GlaxoSmithKline (LSE: GSK) (NYSE: GSK.US) is guaranteeing its dividend for three years was welcomed by the market, which feared the payout would be come under pressure due to falling earnings.
Glaxo has walked a rocky road lately, with worries over the Chinese bribery scandal superseded by fears over falling profits, but chief executive Sir Andrew Witty expects sales growth next year.
Trading at nearly 15% below its 52-week high of 1,646p, now could be like a buying opportunity.
Don’t expect instant relief. Glaxo will return to full health but faces serious challenges, notably with bestselling asthma blockbuster Advair, with sales of this generically challenged drug expected to fall from £4.2bn to as little as £300m over the next five year.
Finding equally lucrative replacements will take time. But the 5.46% yield should help soothe investor nerves until cost-savings and late stage pipeline drugs drive up earnings per share from 2016.
My Aim Is Pru
China and the other major emerging markets may be slowing but that doesn’t seem to have hurt Prudential (LSE: PRU).
First-quarter figures from its Asia Life division saw annual premium equivalent up 28% to £681m, the 22nd consecutive quarter of growth. New business profit grew 22% to £309m.
Profits in Asia have more than doubled over the past five years, compensating for sluggishness in Western markets.
Asian countries combine youthful demographics with low state welfare and sickness provision, which encourages the newly wealthy middle class to buy their own insurance rather than relying on the State to provide.
And Prudential is still performing pretty decently in its more mature US and UK markets.
Its stock isn’t cheap, having leapt 200% in five years. It now trades at 17 times earnings and yields just 2.15%, but you pay top dollar for a top performer like this one.