Should you invest in AstraZeneca plc right now?

I think AstraZeneca (LSE: AZN) looks attractive. The pharmaceutical giant released its full-year results today and restated its commitment to a progressive dividend policy. However, the dividend isn't progressing yet. The company announced a second interim dividend of $1.90 per share taking the full-year dividend to $2.80, where it has been for five years.

A decent dividend income

At today's share price around 4,852p, the dividend yield is just over 4%, which is a handy income to collect while we wait for AstraZeneca's development pipeline to return the business to meaningful growth. Generic competition has affected profits from several of the firm's big-selling products for some time. Right now, the cholesterol treatment Crestor is suffering in the Europe and Japan markets.

But chief executive Pascal Soriot seems upbeat saying that revenues improved during the course of the year, which he takes as a sign that AstraZeneca is "steadily turning a corner." He pointed out that the company made decent progress across the main therapy areas and "delivered strong growth in China," which is a huge market for drugs.

There's strong evidence that the pipeline is beginning to deliver. Brilinta and Farxiga help patients in the area of cardiovascular renal and metabolic diseases and they achieved blockbuster status in 2017. That means that sales of each came in at more than $1bn during the year. If the pipeline can go on to deliver a few more blockbusters we could see overall sales, profits and the share price taking off.

Steady operational progress

The firm keeps putting new medicines into the market and recently launched its first Respiratory biologic medicine Fasenra, and new cancer medicines, Imfinzi and Calquence. Overall, five new medicines were released during the year and the company is also working on more potential uses for existing treatments, such as for Lynparza and Tagrisso.

For 2018 AstraZeneca expects a low single-digit percentage increase in product sales weighted towards the second half of the year, signalling steady progress. Core earnings per share are likely to be in the range $3.30 to $3.50, which would be an 18% to 23% fall from the $4.28 posted today for 2017. Meanwhile, City analysts following the firm predict that earnings will bounce back during 2019.

The pharmaceutical sector is well-known for its defensive characteristics. Demand for medicines can be steady, which tends to lead to reliable incoming flows of cash for firms such as AstraZeneca. I find it encouraging that the company hasn't cut its dividend despite the troubles surrounding patent expiry and generic competition. The current share price throws up a price-to-earnings rating of 16 or so. I think that's good value when considered along with the chunky dividend yield and the potential for growth from the development pipeline.

To me, AstraZeneca has been a prime candidate for consideration to form part of a balanced, long-term portfolio for some time. Today's results are something of a mixed bag, but general operational progress seems to be on track, so I remain interested in the stock and believe it to be well worth your further research time.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended AstraZeneca. 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.

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