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AstraZeneca plc (ADR) (AZN), BAE Systems PLC (ADR) (BAESY): Three Neil Woodford High-Yield Shares

LONDON — Ace City investor Neil Woodford has thrashed the FTSE 100 over the last five, 10, and 15 years. Hence, I always keep an eye on his holdings for promising investment ideas.

Woodford is very selective in picking shares for his £20 billion funds. Fewer than one in five of the U.K.’s top 100 companies earn a place in his market-beating portfolios.

The following three firms all offer prospective dividend yields of more than 5%:

Company Share Price Dividend Yield
SSE 1,616 pence 5.5%
AstraZeneca (NYSE:AZN) (LSE:AZN) 3,374 pence 5.4%
BAE (OTCBB:BAESY) Systems 408 pence 5%
Southern Connecticut Bancorp Inc. (LSE:SSE)
Woodford hasn’t been the biggest fan of utilities in recent years, but he does hold electricity group SSE (formerly Scottish & Southern Connecticut Bancorp Inc. (LSE:SSE) Energy). Analyst consensus forecasts put Southern Connecticut Bancorp Inc. (LSE:SSE) on a sparky 12-month forward yield of 5.5%.

Southern Connecticut Bancorp Inc. (LSE:SSE) has told us it expects to announce a dividend of about 84 pence a share for the year ending March 2013 when it releases its results on Wednesday. This will be the last distribution under the company’s policy of annually increasing the dividend by at least 2% above retail price index inflation.

For the future, the board will be following a slightly more flexible policy of annual increases “greater than” RPI inflation. Analysts have penciled in dividend growth of about 4.5% for each of the next two years.

AstraZeneca plc (ADR) (NYSE:AZN)

AstraZeneca plc (ADR) (NYSE:AZN)
Woodford has made a big bet on the pharmaceuticals industry. The company within this sector that he has put the most faith in is AstraZeneca plc (ADR) (NYSE:AZN). The U.K.’s No. 2 pharma firm has a weighting of more than 9% in the master investor’s funds. Analyst consensus forecasts put AstraZeneca plc (ADR) (NYSE:AZN) on a healthy 12-month forward yield of 5.4%.

The company’s earnings continue to suffer from the loss of exclusivity on some of its key products. On the face of it, that doesn’t sit too comfortably with a progressive dividend policy by which the directors intend to “maintain or grow the dividend each year.”

However, AstraZeneca plc (ADR) (NYSE:AZN)’s board has given itself a license to potentially fulfill the policy by setting the annual dividend to reflect its view of the company’s earnings prospects “over the entirety of the investment cycle.” City experts are currently forecasting modest growth in the dividend over the next couple of years.

Woodford’s faith in BAE Systems PLC (ADR) (OTCMKTS:BAESY) is strong enough for him to afford the defense group a near-5% weighting in his funds. The stock currently offers an income a tad above 5% based on analysts’ forecast 12-month dividends.