GlaxoSmithKline
Pharmaceuticals giant GlaxoSmithKline (LSE: GSK)(NYSE: GSK.US) sells products that its customers cannot live without. This brings a high degree of visibility to its earnings and profits. Even better, it is difficult for competitors to enter such a highly regulated industry. The result is large and reliable profits and dividends.
Glaxo has been increasing its dividend payout year-on-year for more than a decade. Last year, Glaxo paid 74p of dividends, equal to a 4.4% dividend yield at today’s price.
Earnings and dividend growth is forecast for this year and next. That puts the shares on a prospective P/E for 2014 of 13.2, with an expected yield of 4.9%.
While that may not sound cheap, a company of Glaxo’s quality rarely is.
SABMiller
Super-brewer SABMiller (LSE: SAB)(NASDAQOTH: SBMRY.US) is the company behind Grolsch, Peroni, Pilsner Urquell and the eponymous Miller Genuine Draft. In recent times, the company has been making great progress in its biggest market, Latin America. Growth in Africa (ex-South Africa) has also been considerable.
In the last five years, dividends from SAB have increased from $0.58 per share to $1.01 last year. There have been no cuts to the payout in that time. The shares have responded well to this success and are 170% ahead over the period.
Analysts expect SAB to deliver two years of strong dividend and earnings growth. That puts the shares on a P/E of 17.1 for 2015, with an anticipated yield of 2.5%.
Reckitt Benckiser Group
Reckitt Benckiser Group (LSE: RB) is probably the FTSE 100’s best example of a brand-led business. The company sells leading brand domestic products such as Calgon, Harpic and Nurofen. The company spends heavily on advertising these products. This makes it harder for any other firm to bring out a rival. Thanks to its quality products and marketing, RB makes big sales. This brings considerable economies of scale.
In the last five years, RB has increased its earnings per share and dividend per share ever year. The average rate of earnings increase in that time is 16.3%. Dividend growth has been even higher at an average of 19.3% a year.
Growth is expected to be less in future. The shares today trade on a 2013 P/E of 16.9.
If you are looking for solid shares, get the latest Motley Fool report “5 Shares To Retire On” . This detailed research from our team of expert analysts is entirely free and will be delivered to your inbox immediately. Just click here to start reading now.
> David does not own shares in any of the above companies. The Motley Fool has recommended shares in GlaxoSmithKline.
