Should you buy Neil Woodford’s top 3 holdings Imperial Brands plc, AstraZeneca plc & GlaxoSmithKline plc?

Neil Woodford is amongthe most well-known fund managers in the UK. Given his star status, many private investors monitor Woodfords key holdings in an attempt to clone his investment strategy.

So letslook at the top three holdings in the Woodford Equity Income Fund and examine if theyre worth buying.

Financial market volatility

But first, lets rememberthat there could be a great deal of near-term volatility in the financial markets after Fridays EU referendum Brexit vote. The unexpected result has caused unprecedented amounts of uncertainty and if theres one thing financial markets dont like, its uncertainty.

Having said that, Woodford has made his stance clear on the result and has saidhe believes Britains long-term economic future will be largely unaffected by the decision to leave the EU. Hes also stated that his portfolio strategy will not change.

So with that in mind, here are Neil Woodfords largest holdings.

Tobacco King

Woodfords largest holding (7.6% of the fund) is tobacco giant Imperial Brands (LSE: IMB).

Tobacco stocks dont suit everyones investing tastes, but Woodford has made it clear that he remains a strong fan of both Imperial Brands and rival British American Tobacco.

Theres no doubt Imperial Brands has performed well for his portfolio. The stock has delivered total annualised returns of almost 18% per annum over the last five years. But is this a reason to buy Woodfords largest holding?

For me, the key question with Imperial Brands comes down to the long-term sustainability of tobacco revenues. I generally look for long-term revenue drivers when searching for investment opportunities, and personally Im not 100% convinced about the sustainability of the tobacco industry over time.

Having said that, I can see plenty of reasons why investors could be interested in buying Imperial Brands right now though. The stock trades on a respectable P/E ratio of 15.5 times next years earnings, yields an excellent dividend of just under 4%, has high levels of free cash flow and could be seen as a defensive stock in times of uncertainty.

Another key benefit of Imperial Brands is that it generates revenues from all over the world, so a weaker pound would be good for earnings. If youre interested in a safety stock for the current volatile environment, Imperial Brands could be worth a look.

Healthcare theme

Woodfords next two largest holdings are healthcare giants AstraZeneca (LSE: AZN) and GlaxoSmithKline (LSE: GSK) at 7.2% and 6.4% of the portfolio, respectively.

Healthcare is a theme that I like and with the global population ageing, I believe itsa theme that could drive long-term revenues going forward. Its also one that could provide some insulation from Brexit-related market volatility as healthcare is also considered to be a defensive sector.

While both companies have struggled for revenue growth over the last few years, a key attraction of these stocks is their sizeable dividend payouts. AstraZeneca yields around 5.1% while GlaxoSmithKline pays out an even bigger 5.4%.

One concern is that last year both companies dividends exceeded their earnings from continuing operations, which isnt ideal. Its an issue to keep an eye on going forward in the current volatile market. However, I can see the attraction of buckling down with these two healthcare powerhouses.