Some stocks warrant a long-term position in your portfolio. This is particularly true if these stocks pay consistent dividends, and it gets even better if a company offers a dividend-reinvestment program, otherwise known as a DRIP. Consider Glaxo-Smith Kline, Dollar General, Mastercard and American Express as long-term fixtures in your portfolio.
Glaxo-Smith Kline (GSK)
The British pharmaceutical company GSK is the highest-yielding stock of this bunch, clocking in at 4.9%. It is trading very near its 52-week high of $46.50, selling at a whopping 44 times earnings. This may be due to the fact that Glaxo is a consistent-yielding stock, maintaining a 5-year dividend yield average of 4.5%.
Make no mistake about it: Glaxo is not a cheap stock, carrying a P/S of 5.34, with competitors Novartis (NVS), Pfizer (PFE), and Sanofi (SNY) all selling at a better value with a P/S in the 2s. However, GSK’s growth prospects are encouraging, with at least 10 new drugs entering late-stage trials. Furthermore, GSK estimated forward P/E of 12.99 suggests that it might be a better value in the new year.
While Glaxo may have a place in your long term portfolio, one should also consider Novartis. It sells at a cheaper 13 times earnings for the trailing 12-month period, and is expected to be an even better value with a forward P/E of 10.27. Novartis offers low debt, a reasonable dividend, and worldwide sales, and may be undervalued due to eurozone fears. The Swiss-based pharmaceutical company offers a competitive 3.5% dividend.To continue reading, click here.