Next month will be a busy one for many FTSE 100 companies, particularly those regarded as long-term holds by income investors.
Here are three that are scheduled to update the market and might be worth keeping an eye on.
Defensive demon
Set to announce figures for the final quarter of its financial year on 5 February, pharmaceutical giant GlaxoSmithKline (LSE: GSK) is first up.
Despite lagging its index peer Astrazeneca in the performance stakes, Glaxo’s stock has still been in fine form of late. It now trades a little over 20% higher in value compared to twelve months ago. That’s an impressive move for a company boasting a market capitalisation of just under £90bn.
And the dividends? Based on its current share price, Glaxo is predicted to yield 4.5% this year. Compare that to the paltry 1.31% offered by the best instant access Cash ISA and I know where I’d feel more comfortable placing my money.
At 15 times earnings, I suspect the shares still offer value and should continue moving higher, assuming next month’s update contains more encouraging news on its product pipeline and consumer healthcare joint venture with US behemoth Pfizer.
Rocky ride
Another FTSE 100 income favourite reporting next month is iron ore miner Rio Tinto (LSE: RIO). The £67bn market cap company publishes its latest set of annual results on 26 February.
Fresh from a volatile 2019 for the share price thanks to the US-China trade scrap, analysts are forecasting Rio’s earnings per share to dip by 12% in 2020. The dividend is also expected to fall by 21%.
Still, a projected return of 358 cents (272p) per share in the 2020 fiscal year gives a yield of almost 6.6%, which should be more than adequate compensation. And while the extent to which payouts can be covered by a company in this sector is often a concern, the fact that Rio’s balance sheet looks far stronger than it used to suggests there’s no need to worry just yet.
Changing hands for 10 times earnings in 2020, Rio’s shares actually could turn out to be a great buy at their current price if (and it’s a sizeable ‘if’) concerns over slowing global growth diminish and commodity prices subsequently rebound.
As always, however, I’d caution those considering adding a miner or two to their portfolios to ensure that the remainder of their money is spread around other, less cyclical sectors.
Still cheap
The final company on my list of large caps reporting next month is defence juggernaut BAE Systems (LSE: BA). The £20bn business is due to announce full-year results on 20 February.
Like those holding Glaxo, 2019 proved to a great year for owners of the stock (making up for an awful second-half in 2018). Today, BAE’s valuation is a touch over 40% higher than where it was this time last year.
Of course, the recent momentum has sent the dividend yield down but investors should still achieve 3.8% in FY20 based on the current share price and a likely 23.9p per share total payout. Importantly, this cash return is likely to be covered twice by profits, making BAE a far safer income bet compared to other members of the FTSE 100.
Changing hands for 13 times forecast FY20 earnings, I also think the shares might still be undervalued, particularly if recent tension between the US and Iran continues and the firm’s latest acquisitions bed in as intended.
