Snap up these three stocks with attractive yields for the long run

Professional investor Charles Luke tips three London-listed income earners that also have the potential to grow their dividends.

Each week, a professional investor tells MoneyWeek where he'd put his money now. This week:Charles Luke, manager, Murray Income Trust.

There are two key tenets for successful investing. Firstly, take a long-term view and consider the fundamental driving forces behind a company's business model. This will help you to differentiate between short-term problems and more serious structural issues. Secondly, remember the importance of dividends and their compounding benefits.

Over the long run, dividends and their reinvestment generates the greatest proportion of total returns. To my mind the three companies below can deliver attractive yields, with good prospects for longer-term earnings and thus dividend growth.

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Pharmaceutical giant GlaxoSmithKline (LSE: GSK) has had a tough few years with pressure on its respiratory portfolio in America and its well-known problems in China. However, GSK is making sound progress in reshaping its portfolio to provide more stable and sustainable growth, helped in part by a deal with Novartis that has bolstered its vaccines and consumer healthcare units (which in the medium term should comprise more than half of sales).

Furthermore, its ViiV HIV joint venture has attractive prospects and the respiratory portfolio has many appealing characteristics, despite the pressure on its main product, Advair. Overarching all of this is the long-term outlook for growth in emerging markets, where growing wealth will provide new demand for its products.

The company's pipeline is also overlooked, although the fruits of this are only likely to crystallise in the longer term. GSK is committed to maintaining its dividend at 80p for the next three years, providing a yield of 6% a useful return while we wait for the company's transformation to complete.

Chemicals group Elementis (LSE: ELM) has two divisions. Its chromium unit is the dominant player in America, supplying, for example, chromic acid (for chrome plating) and chrome sulphate (used in leather tanning to increase heat and wear resistance).

Meanwhile, its speciality chemicals unit serves end markets in the personal care, decorative, industrial and oil industries. Exposure to the latter has been a source of weakness in recent months, providing an opportunity to buy the shares.

The business as a whole should grow ahead of GDP and the personal care area of speciality chemicals is particularly attractive. Elementis has a net cash balance sheet that the company has used (over the past three years) to pay a special dividend, representing a yield of around 1.5% to supplement the normal 2.5% dividend yield.

I've discussed Unilever (LSE: ULVR) here before and still remain very positive on the outlook. Its strengths include its exposure to faster-growing emerging markets, products with strong brand resonance, comprehensive distribution channels and an experienced management team.

The business mix is being improved to tilt more towards personal care, with selected divestments and bolt-on acquisitions. Margins in the home-care unit have room to improve substantially, while the company as a whole can be run on a more efficient basis, building on progress to date.

In areas of slower growth, Unilever has shown willingness to take action, with the establishment of the "Baking, Cooking and Spreading Company" to provide a greater focus on growth in its spreads business. Although not particularly cheap on an earnings basis, Unilever has a healthy yield and appealing financial characteristics, which should deliver attractive earnings and dividend growth for the very long term.

Charles Luke is manager of the Murray Income Trust (LSE: MUT).