Monday 20 June 2011

Portfolio Buy: AstraZeneca (AZN)

In a recent post I described how I was looking to invest our family's annual ISA allowances for income. I am looking for good, sustainable yield with a reasonable level of risk. Given the recent downturn in consumer spending, I am looking for sectors that will have some resilience.

A second buy (see here for the first purchase) is this high-yield dividend share, which will boost our Level 6 investments of our DIY Income Investor Income Pyramid.

According to This is Money: "A world-leading pharmaceutical group, AstraZeneca was created in 1999 via the merger of Sweden's Astra and the UK's Zeneca, which had been demerged from chemicals group ICI in 1993. About half of its total sales are generated from the US, with over a third of revenues coming from its gastrointestinal treatments such as Prilosec (Losec) and Nexium."

The current dividend yield is around 5.2%.

This high-yield dividend share was one of '5 Monster Dividend Shares' recently identified by Cliff d'Arcy of Motley Fool.

AstraZeneca scored an almost perfect 'A' in Todd Wennings' Dividend Scorecard (published on Motley Fool); he concluded his review as follows: "Big pharma will have its challenges in the next five years as some blockbuster drugs come off patent and governments in developed markets apply pricing pressure in order to save money. Nevertheless, AstraZeneca is a solid healthcare name to consider when building a high-yield portfolio."

So this share seems to tick the boxes for yield, sustainable market sector and risk.

I am not a financial advisor and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.


  1. Great blog and investing philosophy.

    One thing I have not seen in your posts is the concept of averaging your purchases over a period - I am a fan of this - though have applied to funds rather than stocks.

    Regular purchases e.g. monthly into a group of stocks or single lowers the risk that the point you enter happens to be an expensive point in the stock lifecycle.

    Over a long period of time this works well for a dividend focussed investor as well as you ride the peaks and troughs of the stock price and buy into the underlying fundamentals.

    Of course costs can be an issue as the transaction cost on £100 stock purchase as a percentage of the investment is higher but some providors have a phase in plan that supports this - with lower per transaction costs.

    Possibly more viable for investors starting off and having to invest in an ISA monthly to utlise the full limit.

  2. Hi Moneyman

    I think I'll be adding you to my blog roll as you site looks pretty damn good. I recently bought AstraZeneca as well, so it will be interesting to see how things pan out over the next few years.


    John @ the UK Value Investor