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I’d buy this pharma stock and this FTSE 100 dividend hero

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Animalcare Group (LSE: ANCR) may not be the name that springs to mind when asked about bright pharma stocks. But I am convinced the York company has what it takes to deliver stunning shareholder returns in the years ahead.

The AIM-quoted business, as one could probably guess, is an expert in the field of medical treatment for our furry friends. Its self-stated mission “is to renew and strengthen our product range throughout the UK and through distribution partners into other key European territories” and latest trading details revealed the terrific progress it is making in pursuing this objective.

Animalcare saw revenues leap 9.4% during 2017, to £91.9m, or 3.4% at stable exchange rates, beating its earlier expectations. And following the £134m acquisition of Ecuphar last year it now has the scale to really make a splash in the animal health market across the whole of Europe.

City analysts are expecting the company to keep its long record of earnings growth rolling with bottom line rises of 3% and 11% in 2018 and 2019 respectively, next year’s predicted result reflecting the expected revenues and margin opportunities created by 2017’s monster acquisition.

The petcare segment is becoming big business and the Ecuphar buy makes Animalcare a significant player both here in the UK and internationally. I therefore think a forward P/E ratio of 18.9 times is fair value given the pharma star’s bright growth outlook.

Yields leaping to 5%+

An added bonus is that Animalcare’s progressive dividend policy produces a chunky 2.5% yield through to the close of next year. Those on the lookout for yields that blow the competition out of the water, however, may want to give RSA Insurance Group (LSE: RSA) a closer look too.

The FTSE 100 insurer’s restructuring measures of some years back have transformed it into a profit-making machine with brilliant balance sheet strength, qualities that have seen it light a fire under dividends in recent times.

And City analysts expect shareholder payouts to keep on sprinting higher for some time yet. Supported by a predicted 16% earnings improvement in 2018 RSA is expected to raise the dividend to 29.9p per share from 19.6p last year, meaning share pickers can bathe in a gigantic 4.7% yield.

This isn’t the end of the matter, either. In 2019, dividends are expected to rise to 33.8p, helped by an anticipated 6% profits rise and a figure that yields a terrific 5.3%.

A bargain-basement forward P/E rating of 12.6 times seals RSA’s investment case, in my opinion. Indeed, this ultra low reading fails to take into account the Footsie favourite’s exceptional revenues outlook in the UK, Scandinavia and Canada, territories in which it is a major player.

And it also fails to reflect the company’s successful attempts to drive down costs (it now expects to make gross savings of £450m by 2019). I believe RSA is a brilliant bet for growth and income chasers alike.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.