National Grid
With there being a considerable amount of uncertainty present among investors during the last year, shares in National Grid (LSE: NG) (NYSE: NGG.US) have risen by almost 20%. That’s at least partly because they are viewed as a superb defensive play, but also because the company offers excellent income prospects.
For example, National Grid still yields a highly appealing 4.7% despite its aforementioned share price rise. Even more enticing, though, is the company’s aim to increase dividends per share at a faster rate than inflation. This should ensure that investors in the company can enjoy a real terms increase in their income which, in the long run, could prove to be a fillip if inflation rises to more normal levels than at present. As a result, National Grid appears to be an excellent long-term buy.
BAE
Despite its share price rising by 12% in the last six months, BAE (LSE: BA) still offers excellent value for money. For example, it trades on a price to earnings (P/E) ratio of just 12.1 and, with the FTSE 100 having a P/E ratio of around 14.7, this indicates that an upward rerating could be on the cards.
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Certainly, the defence sector is relatively cyclical and, as seen with its profit warning just under a year ago, BAE’s profitability may fluctuate more than that of most companies – especially while austerity dominates much of the developed world.
However, with its bottom line due to rise by 6% in the current year and by a further 5% next year, BAE seems to be more than holding its own during a tough period. And, with trading conditions likely to pick up in the long run, now could be a great time to buy a slice of BAE.
HSBC
While the Chinese economy is growing at a slower rate than anticipated, it still holds vast potential for banks such as HSBC (LSE: HSBA) (NYSE: HSBC.US). Certainly, HSBC needs to address its cost base, which has reached an all-time high. However, with efficiency plans in place, HSBC is forecast to increase its bottom line at an impressive pace of 6% this year, and 8% in the following year.
However, it’s with regard to its dividend yield and valuation that HSBC really impresses. For example, it currently has a yield of 5.7%, with dividend per share growth of 6.2% next year meaning that HSBC could yield as much as 6.1% in 2016. And, with a P/E ratio of just 10.2, it seems to be a bargain buy at the present time – especially with its considerable long term potential in emerging markets.
