Why Growth & Income Chasers Need To Check Out GlaxoSmithKline plc, British American Tobacco plc, Marston’s PLC And Bovis Homes Group plc

Today I am looking at four London favourites offering stupendous value for money.


Don’t get me wrong: I’m fully aware that the crushing issue of exclusivity losses across key labels is likely to keep earnings growth elusive at GlaxoSmithKline (LSE: GSK) for some time yet. But for more patient investors I believe the business’s leading position in a multitude of health segments, bolstered by massive R&D investment and strong record in getting product from lab to market, should deliver meaty returns in the years ahead.

With global healthcare spend galloping higher year after year, the City expects GlaxoSmithKline to rebound from an anticipated 21% earnings decline this year to punch a 12% increase in 2016. Such figures push a P/E multiple of 16.9 times to just 15.3 times for this year — any reading around or below 15 times is considered great value.

And thanks to this solid outlook GlaxoSmithKline has vowed to shell out a full-year dividend of 80p per share through to the close of 2017, producing a chunky yield of 6.5%. I fully expect the pills giant to make good on this promise.

British American Tobacco

As consumer spending clout in emerging regions heads relentlessly higher, I believe British American Tobacco (LSE: BATS) is in great shape to deliver stonking sales growth. These geographies are home to the lion’s share of the world’s smokers, and the London operator has a firm foothold in the market through top-tier labels like Dunhill and Kent.

British American Tobacco is committed to bulking up its presence in these territories, and in recent weeks has announced plans to acquire Polish e-cigarette specialists CHIC Group, as well as swallowing up the whole of Brazil’s Souza Cruz.

Recent top-line troubles are expected to push earnings 1% lower in 2015, but British American Tobacco is expected to bounce back with a 6% increase in 2016. The tobacco giant is consequently set to deal on reasonable P/E ratios of 17.4 times and 16.3 times for these years. But it is in the dividend stakes where the business really sets itself apart, and anticipated rewards of 156.2p per share for this year and 163.8p for 2016 yield 4.3% and 4.5% correspondingly.


Although pub operator Marston’s (LSE: MARS) continues to report solid progress, the company’s share price keeps on sliding steadily lower, no doubt fuelled by fears over the future impact of the ‘living wage.’ But I believe this weakness represents a prime buying opportunity, with the firm’s plans to expand its 1,600-strong pub portfolio likely to offset the impact of rising costs, while specialist ales demand should also remain solid.

The City expects Marston’s to enjoy an 8% earnings bump for the years ending September 2015 and 2016, resulting in ultra-cheap P/E multiples of 11.8 times and 10.9 times. And when you factor in projected dividends of 7p for this year and 7.3p for 2016 — yielding an impressive 4.7% and 4.9% respectively — I believe the beer behemoth provides plenty of bang for one’s buck.

Bovis Homes Group

Thanks to the massive imbalance in the UK housing market, I believe shareholder returns at the likes of Bovis Homes (LSE: BVS) should continue to impress well into the future. Latest Land Registry data yesterday showed house sales advance 4.2% year-on-year in August, down from 4.7% in the previous month but still nothing to be sniffed at. And I fully expect transaction values to keep surging as homebuyer demand outstrips construction activity.

This view is shared by the City, and Bovis Homes is consequently expected to witness a 28% earnings increase in 2015, with a 21% uptick in the following year. These numbers will leave the house builder  changing hands on P/E ratios of just 10.4 times and 8.7 times for these years. Meanwhile, projected payouts of 40p per share for 2015 and 46.9p for 2016 yield an impressive 3.8% and 4.5% correspondingly.

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Royston Wild has no position in any shares mentioned. 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.