Stable dividends mark these pharma giants.
When some investors think of health care, they see the prospect of innovative treatments and big buyouts. And recently, with biotechnology giant Celgene Corp. (Nasdaq: CELG) purchasing Juno Therapeutics (JUNO) for $9 billion and prompting an 80 percent gain for JUNO stock holders, it’s easy to see why. However, high-growth biotech stocks are extremely volatile and there are just as many stories of start-up drug companies that see their shares plummet. It’s a potentially high-reward corner of the market, but also fraught with risk. Meanwhile, Big Pharma companies with market capitalizations that regularly top $100 billion often throw off big dividends that are incredibly reliable. Here are seven to consider.
GlaxoSmithKline (GSK)
British pharmaceutical giant GlaxoSmithKline isn’t at the head of the pack in size, but with roughly $100 billion in market value it is hardly an also-ran. The company has a vibrant prescription drug and vaccine business, but also an impressive array of consumer health offerings including Sensodyne toothpaste, Nicorette nicotine replacements and Breathe Right nasal strips. GSK stock has struggled lately as it has tried to get recent treatments approved by the FDA to refill its product pipeline, with shares basically flat over the last 12 months. But its scale and stability are noteworthy, and its big-time dividend makes it worth a look.
Current yield: 5.3 percent
Johnson & Johnson (JNJ)
Another pharmaceutical powerhouse with a strong consumer health arm is icon Johnson & Johnson. From Acuvue contacts to Neutrogena skincare to Band-Aid bandages, the company is one of the most recognizable brands in America. This consumer side is an important foundation for reliable revenue, but that doesn’t mean J&J has stopped innovating. In 2017, it acquired Swiss biotech company Actelion for $30 billion to get a stake in the company’s up-and-coming drugs. Those are the kind of deals you can make when you’re a nearly $400 billion corporation with a AAA credit rating. And with deep pockets and a commitment to shareholders, investors can be sure their dividend stream is safe at J&J.
Current yield: 2.3 percent
Merck & Co. (MRK)
Another pharma name that has struggled a bit from a share-price perspective is Merck. The firm lost patent exclusivity for blockbuster drugs lately that include cholesterol medication Zetia and Nasonex nasal spray, and recent developments just haven’t been able to move the needle as much as Wall Street would like. However, with a market value of more than $160 billion and about $40 billion in annual revenue, this is not a company that’s going anywhere. And looking forward, it’s encouraging to see Merck’s continued progress with hepatitis treatments, vaccines and animal health products. These developments will assuredly continue to support a generous and reliable dividend for many years.
Current yield: 3.1 percent
Pfizer (PFE)
Unlike some of the others this list, Pfizer has been doing just fine lately thanks to the recent addition of new lucrative treatments to its product pipeline. Recently developed prostate cancer treatment Xtandi has been a big hit as has continued improvement in its lineup of “biosimilar” drugs that extend its patent protections. Shares of PFE stock are up more than 20 percent in the last 12 months, right in line with the broader Standard & Poor’s 500 index over the last year. However, a juicy dividend that is more than a full percentage point higher than the typical S&P stock makes it worth a look from income investors.
Current yield: 3.5 percent
Sanofi SA (SNY)
French pharma giant Sanofi isn’t necessarily given the same attention as American companies that are household names. However, the $100 billion drug giant is a name worth remembering — particularly if you’re an investor looking for income. Not only does the company pay a nice dividend and rival other Big Pharma names in scale, but Sanofi is aggressively expanding. This is evidenced by its recent acquisition of biotechnology company Bioverativ for almost $12 billion. The buyout adds a blockbuster hemophilia treatment to the lineup of SNY drugs, and will ensure the generous dividends keep coming for many years to come.
Current yield: 3.6 percent
Teva Pharmaceutical Industries (TEVA)
Unlike pharma companies that heavily rely on research and branded drugs, Teva found its growth by pushing low-priced generics at high volume — including across fast-growing emerging markets that continue to see big appetite for high quality medical care as their standards of living rise. It’s worth noting that Teva had a rough 2017, however, thanks to increased competition eroding its market share. But after the firing of its CEO and a restructuring that includes cost-cutting and layoffs, the pharmaceutical company is well positioned to mount a comeback in 2018.
Current yield: 4 percent
Novartis (NVS)
Swiss health care giant Novartis makes a wide array of branded prescription drugs, but also sells some of the most popular over-the-counter remedies out there including Excedrin pain relief and Triaminic children’s cold medicine. As with other names on this list, that stable foundation of consumer health care sales provides for reliable revenue and dividends. Novartis recently reported its year-end results, topping both sales and earnings expectations. And looking forward, its guidance predicts modest but continued growth in the middle single-digits for 2018. Steady improvement in operating metrics will surely result in steady improvement in dividend payouts for shareholders, too.
Current yield: 2.9 percent
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7 Big Pharma Stocks to Buy for Big Dividends originally appeared on usnews.com
