This could be a profitable prescription. Open wide and say, “ahhh” — as in ah, the feeling of making a healthy profit. A generation of baby boomers hitting retirement age — and holding onto record…
This could be a profitable prescription.
Open wide and say, “ahhh” — as in ah, the feeling of making a healthy profit. A generation of baby boomers hitting retirement age — and holding onto record amounts of wealth — means a strong outlook for companies in the health care sector. And more than a few are rewarding shareholders two ways, with climbing prices and strong dividends. Picking the best of the pack can pose a challenge. Still, some performers boast much more than simply a clean bill of health. Here are seven dividend stocks in health care that stand out, starting with one of the greatest dividend kings trading on Wall Street today.
While paying out an ever-increasing dividend that dates to President John F. Kennedy’s administration, Johnson & Johnson has watched its stock rise 45 percent in the past five years. It currently trades at close to $140 per share and earnings could go through the roof when it introduces a planned nasal spray based on ketamine. Originally a battlefield anesthetic, ketamine has recently been shown to treat clinical depression with surprising efficacy. Earlier this year, J&J reported that its esketamine spray passed its most recent clinical trial with flying colors. In fact, the FDA awarded esketamine “breakthrough” status in 2016 and is fast-tracking it through the approval process.
While Johnson & Johnson may be a dividend king, Abbott could be considered worthy of Wall Street mythology. ABT recently paid out its 377th consecutive quarterly dividend — which predates the stock market crash of 1929 by five years — and has raised its quarterly dividend (now 28 cents per share) for 46 consecutive years. Its 12-month dividend yield is 1.81 percent — ahead of the sector’s 1.5 percent — and has a three-year dividend growth of 6.1 percent. Meanwhile, the stock of this Chicago-based company continues to cruise, up 32 percent over the last 12 months and 90 percent over the last five years.
Community Healthcare is a real estate investment trust. Concentrated in non-urban areas, mostly the Midwest, South and Texas, the company builds its fortunes on buildings: clinics, medical offices, mental health facilities and specialty properties. Trading at about $31 per share, CHCT remains close to its 52-week high and has a robust dividend of 40 cents per share. It typifies many health care REITS in its strong performance. “There are 19 publicly traded health care REITs and sector pays a median dividend yield of 5.37 percent with some yields as high as 8.5 percent,” says Ross Bowler, CEO at 2nd Market Capital Advisory Corp. in Madison, Wisconsin.
Though off 40 percent from its 2015 peak — when it bought three pharmaceutical companies — Gilead remains a favorite among patient investors. Biopharmas sink or soar on the latest breakthrough and in Gilead’s case that could be Car-T, which uses the immune system to fight cancer. “After their hepatitis treatments came to market, GILD’s returns doubled,” says Robert Spivey, director of research at Valens Research, an international investment company. “The reason GILD has had such strong returns historically is they effectively own the treatment market for HIV and for hepatitis and other liver diseases.” Spivey characterizes Gilead as “an interesting dividend-yielding health care stock, with a 3.2 percent dividend yield currently.”
Becton Dickinson is a classic “picks and shovels” play — meaning you invest in the tools the industry uses as opposed to the final output or service. In this case, “BDX is a global medical technology company engaged in the development, manufacture and sale of a range of medical supplies, devices, laboratory equipment and diagnostic products,” says Kevin M. O’Brien, founder and president at Peak Financial Services and based in the greater Boston area. While noting the dividend yield is low at 1.21 percent, “the stock is up 153 percent over five years and 266 percent over the past 10, while increasing the dividend consistently for the past 46 years.”
Medtronic is in the midst of a promising multi-year turnaround plan, says Keith Elflein, senior vice president at F.L.Putnam Investment Management Co. in Wellesley, Massachusetts. This came about “after Medtronic missed sales expectations in 2016 due to a decline in cardiac defibrillators and stents, as well as a timing issue around a new insulin delivery system.” Fast-forward to 2018: “Medtronic is expected to grow earnings by 7 to 8 percent per year over the next three years.” With a 2.1 percent yield, MDT has increased its dividend by more than 15 percent annually over the last four years.
This Indianapolis pharmaceutical giant is on a path to make its investors healthy, wealthy and wise. Up a stunning 42 percent since February, LLY trades at $106 per share and shareholders have enjoyed uninterrupted dividend increases. The quarterly dividend at 56.3 cents per share is up 15 percent from 2013. There’s good news everywhere you look: a successful diabetes franchise, a 30 percent rise in year-over-year sales in its second quarter, lots of new drugs scheduled for launch through 2023 and a research pipeline that shows no signs of slowing down. The verdict among Wall Street analysts is equally cheery, with seven calling it a “strong buy.”