Too many investors waste time following the daily ups and downs of their portfolio when its the long-term that really matters. Here are two stocks you can buy and largely ignore while you wait for their dividends to make you richer.
Astras star rises
Its been a bountiful few months for investors in pharmaceuticals giant AstraZeneca (LSE: AZN) with the share price leaping 22% from the doldrums of 3,911p to the heady heights of4,790p. I wish I could report that this was due to a host of fabulous new blockbuster treatments but sadly not, its primarily down to Brexit.
The US is AstraZenecas largest market and itsdollar earnings are now worth around 20% more than before the referendum. They could rise even higher next year if the pound falls from todays $1.22 to as low as $1.10 or even parity, as some analysts now foresee. AstraZenecasstable of experimental cancer drugs has also been deemed relatively more attractive in the wakeresearch of stumblesby rivalBristol-Myers Squibb Co. Investors havegrowing faith in itsimmune-oncology pipeline and if theyre right, the share price could really start gushing.
Blockbuster dividends
AstraZeneca currently yields a steady but not spectacular 3.93%, marginallyabove the FTSE 100 average of 3.69%. Future progression will largely depend on whether chief executive Pascal Soriot meets his target of creating a stringof cash-generative blockbuster treatments. It isnt a surefire thing: six consecutive years of falling earnings per share (including a forecast 6% drop in 2016 and 3% in 2017) demonstrate the dangers, and research setbacks could strike at any time. However, it looks a gamble worth taking.
I bet all those retail investors who dived into buy flotation shares in Royal Mail (LSE: RMG) three years ago are now wondering what the fuss was all about. Thosewho got in late and bought as the share price was nudging600p will be feeling aggrieved, with the stock trading at around 486p today. That shows the danger of getting carried away by short-term market noise.
Special delivery
Royal Mail is nowsettling down into the decent long-term buy-and-hold it was always supposed to be. It has enjoyed a steady 2016, its share price rising9% over the last 12 months with trading pretty much in line with management expectations, meaning no nasty surprises for investors. UK letters are declining steadily and shouldcontinue to do so, while the parcels business is battlingon in the face of stiff competition. The groups50% market share and subsequent economies of scale should help it maintain its dominant position, but forecast EPS growth is low-single-digits at best.
For light relief theres the greater excitement of its faster-growing European business, whichhas posted double-digit growth in volumes and revenues. But the real temptation is the yield.At todays4.52% Royal Mail would double your money in 16 years, even without any share price growth. It should eventually make you wealthier, if slowly. You might call it snail mail, but it will get there in the end.
We love a dividend at the Motley Fool, but what we REALLY loveis a rising dividend.
Our analysts reckon they have founda top dividend stock with great prospects, which they name in our BRAND NEW report A Top Income Share from The Motley Fool.
Our analysts areso impressed by this company’s ambitious growth plans they’re happy to call it one of the best income stocks on the market today.
Click here to enjoy this FREE, no-obligation wealth report. It will be yours in moments and won’t cost you a penny.
Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended AstraZeneca. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
