Are you looking to top up your investment portfolio, and buy some new shares? Well, how about these three companies? In this article I will debate the pros and cons of buying into a pharmaceutical firm, an insurer and a broker. Let’s start with the drugs company…
AstraZeneca
The world is getting more populous, and also more wealthy. These certain demographic trends mean that there will be a bright future for Big Pharma.
Of the drugs companies, one of my picks is AstraZeneca (LSE: AZN). What appeals to me about this business is its unerring focus on scientific research as the means to long-term profitability.
Instead of messing about with the tax rules, like Pfizer is doing, or acquiring other companies, AZ’s route to riches is innovation. And it is working. Its portfolio of anti-cancer drugs is amongst the strongest in the medical industry. And the breadth of its past winners means that it will also do well as countries such as India, China and Malaysia expand their healthcare systems.
Astra’s recent successes have already driven the share price higher, but I think there is more to come from this company. A predicted 2015 P/E ratio of 15.93, with a juicy 4.12% dividend yield means this pharma business is fairly priced, and a decent income buy.
Direct Line Group
Another high-yield star I’d like to pick is Direct Line Group (LSE: DLG), an insurance company which has been rising steadily over the past year. This is one of the most dependable companies you can think of, generating prodigious amounts of cash year-in and year-out.
Despite recent price rises, this firm is still reasonably priced, with a forecast P/E ratio of 13.00 and a dividend yield of 3.42%. The sustained and growing profitability of this business is demonstrated by the earnings per share progression:
2012: 13.42p
2013: 22.58p
2014: 25.96p
2015: 29.05p
2016: 27.62p
This is another income share to tuck away in your portfolio.
Tullett Prebon
Tullett Prebon (LSE: TLPR) is a broker which is currently in talks to takeover the broking business of its competitor ICAP.
This is a strong and highly profitable business, which will stand to gain by consolidating the interdealer broking sector. It is also keenly priced, with a P/E ratio of 9.09 and an attractive dividend yield of 4.83%, which is well covered by its profits.
Increased regulation in banking and markets is driving this consolidation, and I think Tullett could well end up as a big fish in the pond of inter-dealing broking. So this company is another of my dividend picks.