The UK’s FTSE 100 is renowned for its portfolio of blue-chip stocks. The index has an average dividend yield of almost 4%, with some dividend stocks boasting yields of 8%-10% on the upper end. With the index in the red this year, there’s room for me to buy the FTSE 100’s top income stocks for a bargain.

High yields are a commodity

Rio Tinto (LSE: RIO) has the FTSE 100’s highest dividend yield of 11%, paying investors approximately £3.07 per share. It’s also worth noting that the mining firm had a stellar 2021, allowing it to pay a special dividend of around £0.46 per share. This brings Rio’s total dividend to £3.53 per share, with its share price also up 8% this year!

While high dividends are attractive, it’s not always sustainable. This tends to be the case with mining companies as they operate in economic cycles. Given that the global economy is expected to slow down this year, Rio’s top line is expecting some bruising. Additionally, China, its biggest customer, still has city-wide lockdowns in place to eradicate Covid. This has halted many construction projects and demand for iron ore. Therefore, I am doubtful that the blue-chip stock can continue generating a high level of passive income for investors.

Bricks and mortar

Persimmon (LSE: PSN) is not historically known for paying a high dividend. Its current dividend yield of 11% is only so high due to its share price plunging 25% this year. That’s because as share prices decrease, yields go up as a result. Nonetheless, the company is expected to pay a dividend of £1.10 per share, down £0.15 from its previous payment.

The reason for this is the firm’s decreasing margins. Its initial dividend of 11% was not well covered by earnings nor forecasts to begin with. Not to mention, higher interest rates are expected to slow the demand for houses. This would have an impact on Persimmon’s sales revenue. Combine that with rising material costs and the FTSE 100 housing giant doesn’t have as much cash to hand out to investors. However, its ex-dividend date is in a month’s time, and could present an opportunity for me to make some passive income on a bargain.

An Imperial dividend

The Imperial Brands (LSE: IMB) share price is up 3% this year due to its defensive nature. Pair that with a dividend yield of 8%, and this stock has been a great asset for investors this year.

The tobacco firm released a positive trading update last month. Smokers do not seem to be quitting in a hurry, and its next generation products showed positive results. This indicates that there may be a future for the company when or if cigarettes die out. Management also mentioned that the firm is in line to meet expectations when it reports its half-year results.

We (expect) full-year net revenue growth of around 0-1% on a constant currency basis and adjusted operating profit growth of around 1%.

Source: Imperial Brands Pre-Close 2022 Trading Update

For that reason, Imperial Brands is likely to continue handing out a healthy dividend as one of the index’s best income stocks.

The post Are the FTSE 100’s top income stocks a bargain? appeared first on The Twelfth Magpie.

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John Choong has no position in any of the shares mentioned at the time of writing. The Motley Fool UK has recommended Imperial Brands. 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.

As good as it sounds, a sky-high dividend yield can often be a red flag when it comes to accessing the best income stocks on the UK market. Does this apply to FTSE 100 tobacco giant Imperial Brands (LSE: IMB)? To help answer this question, it’s worth taking a quick look over today’s full-year numbers. 

Transformation on track

Based on this morning’s report, CEO Stefan Bomhard’s plan to increase investment in its top-five priority markets (which bring in the majority of profit) looks to be bearing fruit. Market share gains were seen in the US, UK and Spain, although Germany and Australia still declined. On top of this, losses at its next-generation product (NGP) division fell by 57% as a result of the company’s decision to exit specific markets.

All told, revenue at the top tier stock rose 0.7% to £32.8bn in the 12 months to the end of September. Operating profit climbed by 15.2% (or £415m) to £3.15bn, albeit supported by the sale of Imperial’s premium cigar business for £281m.

To a point. Looking ahead, IMB stated that it remains on track with the five-year plan outlined at the beginning of the year. 2022 will be a year “of further reorganisation and change“, with adjusted operating profit forecast to rise at a “slightly slower” rate than net revenue due to further investment.

Of course, nothing is ever certain. The ongoing Covid-19 pandemic could still have an influence on sales (and the speed of IMB’s transformation). The company could also face cost pressures going forward. 

Notwithstanding these potential headwinds, it would seem that investors weren’t hugely dissatisfied with today’s report. As I type, the IMB share price is down only slightly. 

Let’s return to those dividends.

Huge dividend yield!

Today, IMB announced a 1% rise to the total dividend. A 139p per share payout gives a trailing yield of 8.7%. For FY22, analysts are expecting this to increase to 143p, which would mean a stonking 9% yield.

For perspective, the FTSE 100 returns ‘just’ 3.4%. Given the inflationary times that we live in, IMB’s cash returns have got to be worth the risk, right?

Well, I’m torn. On the one hand, the tobacco industry looks to be in a state of (very) long-term decline. Backing this up, IMB stock has more than halved in value in the last five years. While the dividends have helped cushion this blow, it’s hardly what investors want to see, especially as other FTSE 100 ‘sin stocks’ have fared better. 

Then again, one could say that an awful lot of negativity is priced in. Right now, Imperial stock trades on a little over six times forecast earnings. With expectations this low, one might speculate that only a small profit beat could bring forth a recovery.

Going back to my earlier question, those dividends should also be safely covered by earnings. This makes a cut unlikely in the near future.

Cheap FTSE 100 stock

As things stand, I wouldn’t be averse to buying IMB for a purely dividend-focused portfolio. That income stream really does look great. 

Having said this, I would ensure I was diversified elsewhere in the FTSE 100 beforehand. Since a share price recovery still looks some way off (if it comes at all), I’d also need to be comfortable holding for years rather than months.

The post 9% dividend yield! Should I buy this cheap FTSE 100 stock today? appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Imperial Brands. 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.

A smoking selection

For defensively-minded investors, I believe that it’s difficult to look past cigarette giant Imperial Brands (LSE: IMB).

The tobacco sector has long been a haven for stock pickers in volatile times like these. And with China cooling, US economic growth stalling, and Britain possibly on the brink of tumbling out of the European Union, I think the likes of Imperial Tobacco could continue to steam higher.

Sure, rising health concerns may make smoking less of a cultural mainstay than in days gone by. But Imperial Brands has what it takes to mitigate falling cigarette volumes as brands like Kool and Davidoff grab market share.

And I reckon the business provides stunning value at the present time, with expected earnings growth of 12% and 6% for the years to September 2016 and 2017, respectively, producing P/E ratings of 15.8 times and 14.8 times.

Furthermore, chunky dividend yields of 4.2% and 4.6% for 2016 and 2017 seal the investment case, in my opinion.

Emerging market marvel

I believe the promise of bulging financial product demand from Africa makes Old Mutual (LSE: OML) a hot growth pick for the years ahead.

The multi-pronged assets specialist is in the process of a massive restructuring that will see it split into four units by 2018, allowing it to concentrate on key markets like South Africa where it eventually plans to relocate.

Although Old Mutual is expected to endure an 8% earnings dip in 2016, the insurer still deals on an ultra-low P/E rating of 10.1 times. And the reading dives to a mere 9.3 times for next year thanks to an anticipated 9% bottom-line bounce-back.

Meanwhile, dividend yields of 4.3% for 2016 and 4.8% for next year smash the FTSE 100 average of 3.5% by some distance.

Make the connection

With its broadband expansion scheme still clicking through the gears, I expect BT Group (LSE: BT-A) to deliver sterling returns in the years ahead.

The telecoms giant announced in May that it plans to spend £6bn during the next three years alone to extend its super-fast broadband and 4G coverage across the country. Previous investment has already worked wonders in transforming its BT Consumer TV, phone and broadband division, helping sales here to leap 7% in the year to March 2016, to £4.6bn.

BT currently deals on a reasonable P/E rating of 15.4 times for current fiscal year, shrugging off a predicted 9%  bottom-line dip as massive capital expenditure weighs. And the multiple drops to 14 times for 2018 thanks to an anticipated 8% earnings rebound.

On top of this, BT carries handy dividend yields of 3.4% and 3.8% for 2017 and 2018, respectively. I reckon the business is a great ‘all-rounder’ at current prices.

The post Why NOW could be the time to buy Imperial Brands plc, Old Mutual plc and BT Group plc! appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

And while investors need to be selective rather than buy any old junk with a high yield, it’s at times like this that investors who are prepared to do their research can benefit over the longer term through buying fundamentally good companies offering above average, and importantly growing, yields.

Be careful with your eggs

Another important factor that should be at the forefront of investors’ minds is to ensure that they don’t put all of their eggs in one basket. For those that are interested there’s plenty of further research in this field, which shows that many inexperienced private investors can underperform the market as a whole by selecting only three or four shares, usually in the same sector. Get the call correct and the outperformance would be significant – a concentrated portfolio of housebuilders would have shown significant gains since 2012, however, those holding mining shares would have seen their portfolios slump.

Turning to the chart, we can see that both of the financial stocks, Lloyds (LSE: LLOY) and Legal & General (LSE: LGEN) have underperformed the wider FTSE 100 while Imperial Brands (LSE: IMB) has managed to outperform by some margin, giving some balance to this particular basket of shares.

A lot to like

As the subtitle suggests, there’s a lot to like about the shares under review today, both in terms of the dividend yield on offer and the dividend growth.

Starting with the lowest yielding share, Imperial Brands, at first glance the shares don’t scream cheap trading at around 15 times forecast earnings and yielding over 4%. However, on closer inspection, 15 times earnings isn’t overly expensive for a defensive share. And while not to every investor’s taste, those who have bought into this share have seen the dividend grow at a CAGR (compound annual growth rate) of over 10% since 2010 according to data from Stockopedia, not to mention the near doubling of the share price!

Next up is private investor favourite Lloyds. While maybe not an obvious choice due to the fact that the bank had to cut its dividend during the financial crisis and didn’t return to the dividend list until 2015 with a final dividend for the year to 2014.

However, the dividend grew by 200% for the year to 2015, and analysts expect the dividend to nearly double again for the year to 2016. With such rapid dividend growth and the shares languishing on a forecast PE of under 9 times earnings, the yield on offer is just under 7% due to the current negativity in the sector.

Finally, we have the star of the show, Legal & General. Like Lloyds and other shares in the financial sector, the shares have underperformed over the last 12 months. However, investors who were brave enough to hold on since 2010 have seen the dividend more than triple and the share price more than quadruple – not bad for a boring insurance company!

The shares currently trade on a forecast PE of just over 10 times earnings and are expected to yield well over 6% making them rather interesting at these prices.

The post 3 Striking dividend opportunities: Lloyds Banking Group plc, Imperial Brands plc and Legal & General Group plc appeared first on The Twelfth Magpie.

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Dave Sullivan owns shares of Imperial Brands. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Financial favourite

Life insurer Prudential (LSE: PRU) has long touted Asia as the key to delivering stunning earnings expansion in the years ahead.

This comes as little surprise: a backcloth of rising disposable income levels, allied with booming population growth, is fuelling insurance product sales like never before. And through careful product roll-outs and acquisitions in the region, Prudential is putting itself in the box seat to enjoy resplendent returns.

In the near-term, however, the City expects Prudential to endure a 4% earnings slide in 2016 as emerging markets cool. Still, this results in a P/E rating of 10.9 times, far below the benchmark of 15 times that illustrates attractive value.

And Prudential’s reading drops to a mere 9.9 times for next year thanks to a predicted 9% bottom-line upsurge. I reckon this is a snip given Prudential’s terrific long-term prospects.

On the catwalk

But Prudential isn’t the only FTSE 100 star benefitting from galloping demand all over the world.

Indeed, premier fashion house Burberry Group (LSE: BRBY) has also ramped up its presence in established and emerging regions in recent years. The company saw underlying revenues rise 1% in October-December despite ongoing challenges in Asia, with sales in the rest of its territories proving broadly resilient.

The ‘Square Mile’ expects Burberry to bounce from an anticipated 8% decline for the year to March 2016 with rises of 1% and 8% in 2017 and 2018 respectively.

Subsequent P/E ratings of 18.5 times for 2017 and 17.1 times for 2018 may not be ‘conventionally’ cheap, but I reckon this is great value given Burberry’s unrivalled brand power and improving global presence.

Make smoking returns

In a bid to traverse the structural decline denting the cigarette industry, Imperial Brands (LSE: IMB) has decided to double-down on its so-called ‘Growth Brands’ like Gauloises and John Player Special to keep delivering sales growth.

And this strategy seems to be paying off handsomely — sales of these labels leapt 7.3% during October-December. On top of this, Imperial Brands is diversifying into other strong growth areas like e-cigarettes and caffeine strips to mitigate falling demand in its traditional markets.

As a consequence, the City expects the London firm to follow an 11% earnings rise in the period to September 2016 with a 6% advance the following year. These numbers leave Imperial Brands dealing on decent P/E ratings of 15.7 times and 14.7 times for 2016 and 2017 correspondingly.

Flying high

The growing phenomenon of low-cost air travel is not one that is likely to go away any time soon, a promising omen for the likes of Wizz Air (LSE: WIZZ).

Passenger numbers continue to surge as European holidaymakers find more dough in their pockets. And those concerned about economic cooling should take comfort from the fact that falling spending power benefits budget flyers like Wizz Air, as travellers switch down from more expensive operators like Lufthansa and British Airways.

With low fuel costs also helping, Wizz Air is expected to follow a predicted 27% earnings rise in the year to March 2016 with a 22% advance in 2017, and a 17% rise in 2018. These figures leave the travel giant dealing on ultra-low P/E ratings of just 12.5 times for the upcoming year, and 11 times for 2018.

The post Hot Growth At Great Prices! Prudential plc, Burberry Group plc, Imperial Brands PLC & Wizz Air Holdings PLC appeared first on The Twelfth Magpie.

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Dividends set to fly

Conventionally speaking, airlines like easyJet (LSE: EZJ) can’t be considered go-to stocks for those seeking dependable dividend flows. ‘Big ticket’ purchases like holidays are always the first things to go when tough economic conditions put pressure on consumer wallets.

But easyJet’s leading position in the budget flight market makes it a robust income selection, in my opinion, as it’s less immune to falling travel spend. In fact, the business is well positioned to enjoy rising passenger numbers should flyers begin to shun more expensive operators like British Airways.

And in the long term, I believe easyJet’s route-and-airport expansion programme — combined with the likelihood of low fuel costs — should keep earnings, and subsequently dividends, rolling higher.

For the years to September 2016 and 2017, respective shareholder rewards of 59.7p and 70.6p per share are currently forecast. These figures produce bumper yields of 3.8% and 4.6%, respectively, and are protected by meaty coverage of 2.4 times.

Construct colossal returns

‘Bricks and mortar’ have traditionally been watchwords for those seeking investment security. And I believe stock selectors can get in on the action by snapping up housebuilders such as Barratt Developments (LSE: BDEV).

The Royal Institution of Chartered Surveyors (RICS) expects property prices to slow in the coming months as stamp duty hikes for landlords kick in. Still, the body expects this weakness to prove temporary as government schemes to boost homebuilding fall short — indeed, RICS expects property values to rise by a quarter over the next five years.

And in the meantime, an environment of low interest rates — allied with steadily-improving buyer affordability — should keep powering buyer demand, in my opinion.

This view is shared by the City, meaning Barratt Developments is anticipated to pay dividends of 29.7p per share in the year to June 2016, and 36.6p in the following period. Subsequently the firm sports massive yields of 5.3% for this year and 6.6% for 2017.

A smouldering selection

Top cigarette manufacturers such as Imperial Brands (LSE: IMB) have seen their top lines take a pasting in recent years. Ever-tighter regulatory restrictions on the sale and use of tobacco products have exacerbated deteriorating social attitudes towards cigarette smoking, while the impact of adverse currency movements has also hit the industry hard.

Still, Imperial Brands has kept its progressive dividend policy in place despite these travails. The business is placing great faith in the potential of its ‘Growth Brands’ like Davidoff and West to drive long-term returns.

Sales volumes of these labels leapt 7.3% between October and December, and I believe Imperial Brands’ decision to supercharge investment in these labels while shuttering underperforming local brands should pay off handsomely. On top of this, the firm’s huge cost-cutting programme also boosts the company’s long-term earnings outlook.

Imperial Brands is expected to shell out a dividend of 155.4p per share in the period to June 2016, creating a huge 4.2% yield. And this reading rises to 4.6% for 2017 thanks to predictions of a 170.7p payment.

The post 3 Big Yielders With Secure Dividends: easyJet plc, Barratt Developments Plc & Imperial Brands PLC appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Break out the bubbly

At first glance, consumer goods plays like Diageo (LSE: DGE) may not be the obvious port of call for those seeking reliable dividend growth during times of macroeconomic turbulence.

Of course, shopper spending is one of the first areas to deteriorate as consumer confidence falls through the floor and people’s wallets and purses become that little bit lighter. But I believe the strength of Diageo’s market-leading labels have the capacity to keep earnings ticking higher regardless of challenging trading conditions.

The London firm is chucking huge sums at developing and marketing brilliant brands such as Captain Morgan rum and Johnnie Walker whisky, and is also doubling-down on the fast-growing premium segment to deliver sales growth. Diageo has rolled out fruit-flavoured versions of its Cîroc high-priced vodka in recent months, for example.

With sales to emerging markets also poised for lift-off, I reckon meaty dividend hikes can be expected in the years ahead as earnings surge. In the meantime, last year’s 56.4p-per-share reward is anticipated to advance to 58.4p in the period to June 2016, creating a handy 3.1% yield.

A defensive destroyer

Underpinned by steady investment by both the US and UK armed forces, I believe major defence supplier BAE Systems (LSE: BA) is a surefire hit for those seeking reliable dividend expansion.

Due to the broad range of potential security threats facing the West — from the increasingly-expansionist policies of China and Russia to the rising might of IS fighters across the Middle East, Africa and now in Europe — demand for BAE Systems’ cutting-edge hardware and software is likely to remain robust looking ahead.

Thanks to its solid long-term earnings outlook, BAE Systems is expected to lift a dividend of 20.5p per share in 2014 to 20.8p for last year, even in spite of an expected 1% earnings decline. And with the bottom line forecast to bump higher again from the current period, another payout rise to 21.5p is predicted for 2016, yielding a brilliant 4.2%.

Light up your investment returns

It’s no secret that cigarette giants such as Imperial Brands (LSE: IMB), as Imperial Tobacco Group is now known, must overcome a multitude of mighty hurdles — from rising regulatory hurdles to a growing black market — to keep earnings growing in the years ahead.

But thanks to the titanic strength of labels like Davidoff, West and John Player Special, I believe Imperial Brands (like Diageo) has what it takes to traverse these problems and keep sales growing. Indeed, the business has shuttered scores of local labels to focus investment on these so-called ‘Growth Brands’, a decision that’s delivering handsome rewards.

With the company also entering other hot markets like e-cigarettes, the City is confident that Imperial Brands should keep its progressive dividend policy well on track. The business is expected to hike last year’s dividend of 141p per share to 155.1p in the year to September 2016, creating a chunky yield of 4.4%. And I expect payouts to keep rolling higher as earnings steadily advance.

The post Diageo plc, BAE Systems plc & Imperial Brands PLC: Dividend Delights For Difficult Times appeared first on The Twelfth Magpie.

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Historical Performance

Historically, tobacco stocks have been very successful investments too. In the past 10 years, British American Tobacco (LSE: BATS) has delivered shareholders a total return (that is, the rate of return with dividends being reinvested in the stock) of 176%. Imperial Tobacco Group (LSE: IMT), which has done somewhat less well, returned shareholders with a gain of 98%.

Looking forward, both companies are unlikely to repeat their performances in the future. Global cigarette volumes growth is slowing and regulation on the industry is increasing around the world. The rising popularity of e-cigarettes could certainly be game changer for the industry, and this uncertainty has already impacted on the valuations of the major tobacco stocks.

Nevertheless, both companies should still be able to grow their earnings steadily in the medium term. Earnings continue to expand because profit margins are widening from price increases, which is made possible by the brand value that these companies have built up.

And even as volumes shrink, further industry consolidation could enable firms to continue to grow profits. Compared to the food and personal care markets, tobacco brands operate in quite a fragmented market and consolidation would help to cut costs and bolster market share.

Valuations

At a first glance, there seems to be little difference between the valuations of the two tobacco companies. The dividend yields, the most important metric for income investors, for both companies are essentially identical.

Historically, British American Tobacco has a better track record of delivering growth in earnings, thanks to its emerging market focus. However, its forward-looking near-term outlook is not as attractive as Imperial Tobacco’s. City analysts expect Imperial Tobacco’s underlying EPS will grow by an annualised 8.6%, compared to British American Tobacco’s 6.5%. Dividend growth should also be faster on Imperial Tobacco’s side, as it has a lower payout ratio and is set to benefit from faster earnings growth.

This is because Imperial Tobacco has greater potential to cut costs, as it is in early stages of its cost optimisation programme. On the other hand, British American Tobacco faces major short term headwinds because of weakening emerging market currencies.

In the long term, this should not matter too much, as currencies tend to display mean reversion. What’s more, the outlook for cigarette volume growth in emerging markets is more promising.

Better buy?

In summary, both tobacco stocks are very tempting investments for investors looking for income and capital preservation. Both stocks have similar valuations and each have their own strengths and weaknesses. But, for me, Imperial Tobacco inches ahead slightly. Stock markets pay a lot of attention on short term financial performance and Imperial Tobacco benefits from faster near-term earnings growth. 

The post British American Tobacco plc Or Imperial Tobacco Group PLC: Which Stock Is The Better Buy? appeared first on The Twelfth Magpie.

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Manufacture magnificent returns

Thanks to the unrivalled pricing power of its broad product portfolio, I reckon household goods manufacturer Unilever (LSE: ULVR) is a terrific selection for those seeking robust bottom-line growth in the years ahead.

While it is obvious that wider economic travails can have a detrimental impact on consumer spending habits, Unilever — through a range of products from Axe deodorant to Hellmann’s mayonnaise — is immune from the worst of these pressures thanks to the brilliant brand loyalty enjoyed by its labels.

So although economic conditions in emerging markets have become more challenging over the past year, Unilever has still been able to print strong revenues growth. Indeed, sales from such markets rose 8.1% between October and December, broadly stable from the previous quarter and up from 4.1% in the same 2014 period.

With Unilever also doubling down on its cost-saving programmes, the City expects earnings to rise an additional 6% in 2016, resulting in a P/E rating of 20.1 times. I reckon this represents great value given the enduring popularity of Unilever’s labels across the globe.

A matinee idol

Regardless of the broader state of the British economy, one thing is for sure: Britain’s appetite for ‘catching a flick’ is stronger than ever. A trip to the cinema is a relatively-inexpensive way of getting your kicks, making the likes of Cineworld (LSE: CINE) a strong contender for reliable bottom-line expansion.

Data from industry researcher Rentrak showed total UK box office takings hit a colossal £1.31bn during 2015, up 15% from the prior year and representing the highest-grossing year ever. The result was driven by hits like Spectre and Star Wars: The Force Awakens, and I believe the release of blockbusters like Batman v Superman, Independence Day 2 and the next Bourne instalment in 2016 alone should keep ticket sales rising.

And the potential for further expansion in Europe could provide Cineworld’s long-term earnings outlook with additional fuel. In the meantime the number crunchers expect the chain to produce a further 9% earnings bounce in 2016, resulting in a decent P/E multiple of 18 times.

A smoking growth bet

The tobacco sector has long been a ‘go-to’ segment for those seeking dependable profits expansion, and industry giant Imperial Tobacco (LSE: IMT) is a particular favourite for growth-hungry investors.

Like Unilever, Imperial Tobacco can count on a wide array of market-leading labels such as Gauloises and West to keep revenues moving steadily higher. And thanks to expansion in the North American marketplace, not to mention the firm’s rising presence in hot growth areas like caffeine strips and e-cigarettes, Imperial Tobacco can look forward to further strong sales growth in my opinion.

And with the business also doubling down on investment in its industry-leading labels, the City expects Imperial Tobacco to enjoy a 10% earnings surge in the 12 months to June 2016. I believe a consequent P/E rating of just 15.1 times is a steal given the company’s sterling growth outlook.

The post Unilever plc, Cineworld Group plc & Imperial Tobacco Group PLC: Perfect Stocks For Volatile Times appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

There has certainly been plenty to test even the most bullish of stock pickers. Choose from further swathes of disappointing data from China; poor financial updates from the US, allied to concerns over the implications of Federal Reserve monetary tightening; and of course, the further downleg in commodity values.

These concerns have turned the FTSE 100 from something of a damp squib into a hazardous firecracker. The index fell 5% during the course of 2015 and has collapsed 7% since the turn of the year. This comes as little surprise however given the FTSE’s strong bias towards mining and commodity stocks, segments that are facing an increasingly-precarious outlook.

But I believe the FTSE’s prolonged sell-off can provide plenty of opportunities for savvy investors. As a broad rule, successful stock pickers tend to select companies with a view to holding them for a minimum of five years, and I believe there are plenty of stocks at the top of the London Stock Exchange whose long-term prospects remain extremely bright.

Housing heroes

Housebuilders like Taylor Wimpey (LSE: TW) and Barratt Developments (LSE: BDEV) were two of the FTSE 100’s strongest performers during the course of 2015, a backcloth of surging homebuyer demand and the enduring shortage of new homes entering the market driving values resoundingly higher.

Still, these shares have been washed-out by the wider malaise currently denting investor sentiment, and Taylor Wimpey and Barratt Developments have seen their values fall 12% and 10% respectively since the start of January.

But I believe this represents a fresh buying opportunity as house price growth shows no signs of slowing. Indeed, EY Item Club estimates that home values will advance a further 6.5% during 2015 alone.

Brand beauties

Elsewhere, I believe that selecting companies boasting stellar brand power is more important than ever as worsening economic pressures threaten to dent broader consumer spending activity.

With this in mind, I believe diversified manufacturer Unilever (LSE: ULVR) is a terrific defensive bet, a stock whose labels like Dove soap and VO5 shampoo command strong shopper loyalty. As such, the business enjoys robust revenue visibility, whatever the financial climate.

Unilever can afford to lift prices even as consumers’ wallets become lighter. Indeed, the London company continues to shrug cyclical woes in emerging markets, and saw sales in these regions rising 8.4% in July-September, accelerating from 6.5% in the prior quarter.

Fellow household goods leviathan Reckitt Benckiser (LSE: RB), along with drinks manufacturer Diageo (LSE: DGE) and cigarette giant Imperial Tobacco (LSE: IMT), also enjoy brilliant pricing power through their market-leading labels.

Medical marvels

Regardless of the impact of cyclical bumpiness in the global economy, medicine demand is of course one of life’s essentials, and I believe a backcloth of rising populations and galloping healthcare investment the world over should keep powering drugs growth higher in the years ahead.

FTSE 100 stalwarts GlaxoSmithKline (LSE: GSK) and AstraZeneca (LSE: AZN) have both thrown vast amounts of cash at reinventing their product pipelines, work that’s expected to put to bed the impact of crippling patent losses and drive earnings higher again in the next few years.

And investors should also keep an eye on Hikma Pharmaceuticals (LSE: HIK), a pharma play that (like GlaxoSmithKline and AstraZeneca) has invested heavily on bolt-on acquisitions to supercharge sales growth in developed and developing regions alike.

The post Forget Fear: Why The FTSE 100 Can Still Yield Terrific Returns! appeared first on The Twelfth Magpie.

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Royston Wild owns shares of Barratt Developments. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended AstraZeneca, GlaxoSmithKline, and Hikma Pharmaceuticals. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.