Even though the FTSE 100 has pulled back in recent weeks and the future looks decidedly uncertain, in the long run investing in shares should pay off. Indeed, for investors willing to take risk, now could prove to be a great time to buy shares in top quality companies at slightly depressed prices.
Of course, no one company is likely to make you an millionaire overnight, but the following three stocks all trade at attractive valuations, have strong prospects and impressive yields. As such, they could help to improve your financial outlook.
GlaxoSmithKline
It’s been a tough time to be a GlaxoSmithKline (LSE: GSK) shareholder recently, with the company’s share price being hit due to allegations of corruption in China. However, looking ahead, GlaxoSmithKline has huge potential.
For starters, its pipeline is very strong and very well-diversified, with the potential to boost the company’s bottom line well into the future. In addition, shares in the company now trade on a price to earnings (P/E) ratio of just 12.3, which is significantly below the FTSE 100’s P/E of 13.3, while they currently yield a whopping 5.9%. As such, they could make for a profitable investment.
National Grid
One stock that is happy to be out of the headlines is National Grid (LSE: NG). While sector peers such as Centrica and SSE are continually bashed by the media, National Grid seems to make quiet progress while offering investors stunning income potential.
Indeed, the company currently yields an impressive 5.1% — but what matters more to investors is the company’s aim to increase dividend in-line with inflation over the medium term. This goal could mean sentiment improves for National Grid going forward, as a loose monetary policy is likely to mean higher rates of inflation in future years.
Lloyds
Lloyds (LSE: LLOY) had a fantastic year in 2013, with shares in the part government-owned bank rising by an incredible 61%. Of course, 2014 was bound to be a disappointment after such strong gains, but even so, many investors have been surprised at just how badly Lloyds has performed this year, with shares in the bank being down 7% year-to-date. However, this presents an opportunity to buy a stake in what looks set to be a very attractive income play.
Lloyds is forecast to pay a dividend of 3.2p per share next year, which at current prices equates to a yield of 4.4%. Furthermore, with profits and dividends set to increase over the next few years, Lloyds could see its share price bid up as investors seek out both strong growth potential and a generous yield.
