This year, UK companies have cut or deferred a staggering £30bn in dividend payouts to investors. However, several firms have bucked this trend. AstraZeneca (LSE: AZN) shares for one, still offer investors a healthy level of dividend income.
I think the company can maintain these dividend credentials for decades. Today, I’m going to explain why.
AstraZeneca shares may offer income for life
As one of the UK’s largest healthcare companies, AstraZeneca is one of the most defensive investments on the London market. This year, AstraZeneca shares have taken off.
The company is at the forefront of the worldwide hunt for a coronavirus vaccine. If it can cross the finish line first, there could be substantial financial rewards for the business.
But this is just one string to Astra’s bow. The company has a stable of other treatments on sale or in development that will support growth for the next few years.
For example, during the past decade, the firm has invested billions in its oncology business. These investments are now really starting to pay off. The group currently has a handful of oncology treatments on the market, which have exceeded £1bn in annual sales. These have helped improve investor sentiment towards AstraZeneca shares.
More launches are planned over the next few years, and the firm is always looking for new ways it can use its treatments to help cancer patients.
As well as this specialist business, Astra also has a reliable income stream from its cardiovascular drugs and respiratory treatments. These complement its rapidly growing oncology business.
The world will always need Astra’s treatments. Unfortunately, cancers and diseases are not going to vanish overnight. They’re only becoming more common as the world’s population grows and becomes older. This should provide a strong tailwind for AstraZeneca’s shares in the years and decades ahead.
Pay you for life
As such, based on this favourable backdrop, I think AstraZeneca shares could pay you for the rest of your life. Not only is the demand for the company’s treatments and products unlikely to drop over the long term, management is also investing significant amounts to make sure the business stays ahead of the competition. It always has new products to bring to market.
I’m encouraged by this investment, and I think it could help the company’s bottom line grow steadily in the long run which should, in turn, support dividend growth.
The stock currently supports a dividend yield of 2.5%, which is below the FTSE 100 average of around 3.7%. Nevertheless, I think it’s worth taking the lower return considering the company’s long-term growth potential. What’s more, unlike so many other FTSE 100 corporations, Astra has maintained its dividend through the current crisis.
In my opinion, it’s certainly worth taking this fact into account when considering AstraZeneca shares for your portfolio. There aren’t many other businesses that offer the same kind of defensive qualities.
Rupert Hargreaves owns no share 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.