Pharma stocks are just what the doctor ordered in 2022.
In the current “risk off” environment on Wall Street, pharmaceutical stocks are a good example of investments that are safe havens in uncertain times. Health care is generally one of the most stable industries out there, given that people will continue to spend on medicine regardless of inflation or employment trends. Furthermore, the World Health Organization estimates the number of people age 60 and older will nearly double by 2050 compared to 2015 levels — meaning a lot more spending on prescription drugs to help keep older folks healthy and active as their bodies begin to break down. The following nine pharma stocks all offer yields of more than 3% right now, and share prices that have performed much better than the broader market so far in 2022. Dividend yields are calculated for the forward four quarters using the stock’s most recent dividend, or MRD.
AbbVie Inc. (ticker: ABBV)
AbbVie has been a volatile pharma stock over the last few years, racing from the low $50s near the end of 2016 to a high of about $120 in 2018, before plunging back to $65 or so amid the pandemic-related disruptions of 2020. But ABBV is once again ascendant, powering to new all-time highs of almost $150 this year thanks to the strong performance of its branded biopharmaceutical operations. It’s one of the rare stocks sitting on a gain in an otherwise rough year on Wall Street, but on top of that, it offers a reliable and generous dividend yield. In fact, when you trace back through AbbVie’s 2013 spinoff to its roots as a company, it features at least 25 consecutive years of dividend increases.
Dividend yield (MRD): 3.7%
Amgen Inc. (AMGN)
Amgen doesn’t have the deep roots of some 100-year-old drugmakers, having only been born in the 1980s. However, its youth is actually a selling point as it has been one of the leaders in innovative therapies and biopharmaceutical applications since its inception. Several fast-growing drugs in its portfolio are growing sales quickly, including osteoporosis treatment Prolia and osteoporosis drug Evenity. Specifically, in Q1, sales of Prolia grew by 12% to $852 million, while Evenity’s sales came in at $170 million, an impressive 59% higher. AMGN stock is sitting on nearly 10% gains since Jan. 1, thanks in part to these strong results. But more importantly, this growth should continue to power consistent and generous dividends for many years to come.
Dividend yield: 3%
Cardinal Health Inc. (CAH)
Technically an integrated medical company that offers products and services beyond just drugs, CAH is an attractive dividend stock with a strong pharma footprint thanks to its presence as one of the largest distributors of drugs, even if it doesn’t research branded cures on its own. Its pharmaceutical segment, which drives about 90% of both revenue and profit for Cardinal, distributes branded third-party drugs as well as generic pharmaceuticals, over-the-counter medicine and consumer products to pharmacies and health care facilities. The margins are a bit lower for Cardinal, as it’s mainly a middleman and generics player in the pharma world, but it offers consistent results that have powered 35 consecutive dividend increases.
Dividend yield: 3.4%
Gilead Sciences Inc. (GILD)
Gilead Sciences is a roughly $80 billion biopharmaceutical company that focuses largely on “orphan drugs” and medicines that address unmet medical needs. These include diseases of the liver and rare forms of cancer, but GILD also has maintenance drugs for cardiovascular conditions that have a much wider group of patients. The wide array of offerings helps fuel consistent payouts to shareholders. Current distributions are 73 cents per quarter, up 70% from 43 cents a share back at the beginning of 2016 and proof that this is a pharmaceutical stock committed to sharing its success with investors.
Dividend yield: 4.5%
GlaxoSmithKline PLC (GSK)
With a strong portfolio of respiratory condition treatments and HIV drugs, GlaxoSmithKline is a Big Pharma mainstay with high-margin products that should continue to deliver for the long term. In addition to big moneymakers like its COPD treatment Trelegy, GSK recently struck a deal to purchase Sierra Oncology Inc. (SRRA) for a total of $1.9 billion to bolster its oncology offerings. Furthermore, plans to spin off its consumer-focused products in July to streamline and focus operations could help this health care giant maintain its dominance in the future. With an above- average yield and a bright future, it’s no wonder that GSK stock has posted a small gain year to date in 2022 amid volatility elsewhere on Wall Street.
Dividend yield: 3.2%
Novartis AG (NVS)
Switzerland-based Novartis is a health care company that has a wide array of pharmaceutical products that include neuroscience, immunology, dermatology and cardiovascular drugs. Thanks in part to strong performance, it is one of a few stocks that has posted positive gains in 2022 despite headwinds elsewhere in the market. Specifically, in April, NVS reported solid results for Q1 that included a 10% jump in sales for its top-selling Cosentyx psoriatic arthritis drug. With a diverse portfolio of pharmaceuticals and strong momentum in a down market, NVS is worth a look for many reasons — and its above-average yield is the icing on the cake.
Dividend yield: 3.6%
Pfizer Inc. (PFE)
With more than 330 consecutive dividend payments and a streak of 12 straight years where those dividends have edged higher, Pfizer represents one of the most reliable income investments on Wall Street. Pfizer has been admittedly volatile over the last year as investors have tried to make sense of the stock post-pandemic, now that the big boost from its leading COVID vaccines is mostly in the rearview mirror. However, the stock remains very attractive right now thanks to billions in quarterly revenue from diversified products, including oncology and internal medicine, well outside its vaccine business. Shares have held mostly flat in 2022, too, proving it’s a safer alternative than some other stocks out there.
Dividend yield: 3%
Viatris Inc. (VTRS)
Though it’s the smallest drugmaker on this list, with a market capitalization of just under $14 billion, this pharmaceutical company is worth a look thanks to its consistent and generous dividend payments. Created via a spinoff of some Pfizer assets and combined with Mylan NV to form a new entity, Viatris began trading independently in 2020. It offers prescription brand drugs, generic drugs, biosimilars and active pharmaceutical ingredients to end users. The company’s treatments span a wide array of maladies, including infectious diseases, oncology, ophthalmology and dermatology. With annual earnings per share of almost $3.50 but dividends at just 48 cents per year, there is ample upside for increases in the future — but investors already get a juicy current yield to make the wait worthwhile.
Dividend yield: 4.1%
Grifols SA (GRFS)
Never heard of Grifols? You’re probably not alone, as this Spanish drugmaker only has a market capitalization of around $16 billion and is much smaller than many U.S.-based pharmaceutical giants. However, it is highly specialized in blood plasma-derived medicines and “hemoderivatives” and has carved out a profitable niche for itself. Though its dividends are paid on a cycle where they are distributed twice a year, most recently 46 cents in June 2021 and 20 cents in October, the total payouts add up to a yield that is roughly four times that of the typical domestic large cap in the S&P 500 index. And with GRFS stock up more than 15% so far in 2022 thanks to strong fundamentals, it has the distinction of being among the very best-performing pharma stocks of the year on top of its income potential.
Dividend yield: 5.0%
9 best pharmaceutical stocks to buy for income:
— AbbVie Inc. (ABBV)
— Amgen Inc. (AMGN)
— Cardinal Health Inc. (CAH)
— Gilead Sciences Inc. (GILD)
— GlaxoSmithKline PLC (GSK)
— Novartis AG (NVS)
— Pfizer Inc. (PFE)
— Viatris Inc. (VTRS)
— Grifols SA (GRFS)
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9 Best Pharmaceutical Stocks to Buy for Income originally appeared on usnews.com
Update 05/26/22: This story was published at an earlier date and has been updated with new information.
