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2 FTSE 100 world-beating income growth stocks I’d buy to hold forever

If you’re looking for income stocks to add to your portfolio, then I highly recommend pharmaceutical giant AstraZeneca (LSE: AZN).

Astra’s most attractive quality is the fact that this company is a world leader in the pharmaceutical space, and is currently pushing out some of the most revolutionary treatments for cancer around.

For example, last weekend, the company revealed data at the American Society of Clinical Oncology, showing that its flagship cancer treatment, Imfinzi could prolong the lives of lung cancer patients whose disease had reached the third stage.

On top of this, today, Astra announced that its blood cancer drug, Calquence, showed meaningful improvement in patients with lymphocytic leukaemia when compared with a chemotherapy-based treatment. 

A world-leader

These positive developments only served to reinforce my view that Astra is a giant force in the battle against cancer, and the revolutionary treatment should guarantee an income stream for many years to come. Indeed, after several years of stagnation, City analysts expect the company to return to growth this year.

Analysts have pencilled in normalised earnings per share of $3.60 (283p) for 2019, putting the stock on a forward P/E of 21.2. As the company puts more treatments on the market, analysts are expecting further growth in 2020. The City has pencilled in earnings growth of 19.6% for the year, leaving the stock dealing at a 2020 P/E of 17.8.

This valuation looks a bit on the expensive side, but I think it is a price worth paying for the company’s growth and leading position in the global immuno-oncology market. On top of Astra’s growth potential, investors can also look forward to a dividend yield of 3.6%, covered 1.3 times by earnings per share, that’s before taking into account the City’s earnings growth forecasts for the next two years.

Proven value creator

The second business I’m going to profile has established itself as one of the best property companies UK investors can own over the past few years. The company I’m talking about is FTSE 100 commercial real estate REIT Segro (LSE: SGRO).

Segro owns and manages warehouse properties across the UK and Europe. Demand for these properties has boomed in line with the growing demand for online shopping, and the company has wasted no time in making the most of this opportunity.

Over the past six years, book value per share has increased by around 17% per annum as the enterprise has acquired new properties with reinvested earnings and additional cash from shareholders. And as the portfolio has grown, so has the company’s dividend.

As a REIT, Segro has to distribute the majority of its rental income from warehouse properties to investors as a property income distribution. For 2019, analysts reckon the company will distribute a total of 19.9p to shareholders, giving a dividend yield of 2.8% at the time of writing.

This level of income might not seem that attractive at first, but over the past five years, Segro’s distribution to shareholders has increased by approximately 60%. If the business continues to expand as it has done since 2013, I believe the payout will grow a further 60% over the next five years, potentially giving investors buying today a dividend yield of nearly 6%. This dividend growth potential is the reason why I’m recommending Segro as an income stock you can buy and hold forever.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended AstraZeneca. 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.