The Motley Fool

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

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

A person holding onto a fan of twenty pound notes
Image source: Getty Images.

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.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

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.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.