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Can these 2 stocks deliver healthy dividends forever?

Royal Mail: Fair use

Too many investors waste time following the daily ups and downs of their portfolio when it’s 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.

Astra’s star rises

It’s 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 of 4,790p. I wish I could report that this was due to a host of fabulous new blockbuster treatments but sadly not, it’s primarily down to Brexit.

The US is AstraZeneca’s largest market and its dollar earnings are now worth around 20% more than before the referendum. They could rise even higher next year if the pound falls from today’s $1.22 to as low as $1.10 or even parity, as some analysts now foresee. AstraZeneca’s stable of experimental cancer drugs has also been deemed relatively more attractive in the wake research of stumbles by rival Bristol-Myers Squibb Co. Investors have growing faith in its immune-oncology pipeline and if they’re right, the share price could really start gushing.

Blockbuster dividends

AstraZeneca currently yields a steady but not spectacular 3.93%, marginally above the FTSE 100 average of 3.69%. Future progression will largely depend on whether chief executive Pascal Soriot meets his target of creating a string of cash-generative blockbuster treatments. It isn’t 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. Those who got in late and bought as the share price was nudging 600p 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 now settling down into the decent long-term buy-and-hold it was always supposed to be. It has enjoyed a steady 2016, its share price rising 9% 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 should continue to do so, while the parcels business is battling on in the face of stiff competition. The group’s 50% 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 there’s the greater excitement of its faster-growing European business, which has posted double-digit growth in volumes and revenues. But the real temptation is the yield. At today’s 4.52% 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.

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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.