Solid Yields And Strong Growth Prospects: What’s Not To Like About AstraZeneca plc, Aviva plc, GlaxoSmithKline plc, Prudential plc and Unilever plc

A bitter pill

2015 has been a bumpy year for AstraZeneca (LSE: AZN), as it continues to suffer from loss of exclusivity on its leading blockbuster drugs and competition from generics. This is a bitter pill for investors to swallow but there is an antidote, with chief executive Pascal Soriot driving through a new generation of blockbuster cancer drugs and focusing heavily on diabetes in a bid to deliver revenue of $45bn-plus by 2023. 

As HSBC recently noted, AZN has a large amount of news flow on late-stage research & development pipeline products due before the year-end. At 15 times earnings AZN is nicely priced (if not exactly cheap). Yielding 4.20% it isn’t a dividend behemoth but a steady Eddie. But it’s investing wisely in its future and now could be a good time for long-term investors to jump in.

Viva Aviva

I bought into the Aviva (LSE: AV) turnaround story some years ago and although I am nicely up overall the last year has been a disappointment, with the share price down 12%. Now that its purchase of Friends Life is out of the way, management should be free to focus on driving the new business forward, buoyed by a healthy balance sheet.

Half-year results show Aviva becoming a leaner, meaner company, trading at less than 10 times earnings the valuation is lean and mean as well. The yield is a tepid 3.83% but management did hike the dividend by 15% recently, and further progression should be expected.

Take Cover

The many investors who put their faith in GlaxoSmithKline (LSE: GSK) have been poorly rewarded, as the share price is up a meagre 5% on five years ago. The joy of this stock is the yield, which is now over 6% and management is keen to further reward loyal shareholders with special dividends on top. But don’t get too carried away, as cover is looking dangerously thin at 1.2 times.

Bank of America Merrill Lynch recently upgraded GlaxoSmithKline to neutral from underperform, noting that the stock is trading 18% off its April highs. Forecast earnings per share growth of 12% next year points to a more promising future, as does the pipeline news flow. GlaxoSmithKline does need some good news, if today’s juicy dividend is to be sustained into 2017 and beyond. Recent bad news makes today an appealing entry point.

Dear Prudence

Insurer Prudential (LSE: PRU) remains one of my portfolio’s best long-term performers yet it is down 16% in the last six months. After its multi-year Asian growth spurt some kind of steadying off was inevitable. Sadly, it hasn’t done much for the yield, currently 2.64%, but at 14 times earnings Pru is notably cheaper than it was.

Asia has been more curse than blessing in recent months, especially since Pru’s asset management arm M&G is highly exposed to the region’s stock markets. The share price may be struggling but the company itself continues to grow and this mismatch makes now a good time to buy.

Household Goodie

Unilever (LSE: ULVR) is another long-term FTSE 100 favourite taking a bashing on slowing Chinese growth expectations. It took a further knock last month, when Goldman Sachs shockingly downgraded it to ‘sell’.

I’m used to Unilever trading at more than 20 times earnings so today’s P/E of 15.88 looks like bargain territory. The yield is slightly tastier than of yore, at 3.45%. Market conditions are challenging, but Unilever’s sales are still growing, and if you’ve waited as long as I have for a decent opportunity to buy, you might have to accept that this is it.

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Harvey Jones holds shares in Aviva and Prudential. The Motley Fool UK owns shares in Unilever. The Motley Fool UK has recommended GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.