The global pharmaceutical industry will generate more than $1.16 trillion in sales in 2024, according to Statista. The oncology segment alone is expected to generate $214 billion in sales this year. The pharma industry is expected to grow 6.2% annually, reaching $1.47 trillion by 2028.
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Not only are pharmaceutical stocks excellent defensive investments in an uncertain economy, some pharma stocks pay sizable dividends that can be a source of steady income and help offset the impact of inflation.
Here are seven pharmaceutical stocks to buy with dividends of at least 2%, according to Bank of America:
| Stock | Implied upside over April 26 close | Forward dividend yield |
| Merck & Co. Inc. (ticker: MRK) | 2.9% | 2.4% |
| AstraZeneca PLC (AZN) | 22% | 2% |
| Novartis AG (NVS) | 32.4% | 3.9% |
| Sanofi (SNY) | 32.3% | 4.2% |
| Gilead Sciences Inc. (GILD) | 45.2% | 4.7% |
| Takeda Pharmaceutical Co. Ltd. (TAK) | 28.2% | 4.9% |
| Royalty Pharma PLC (RPRX) | 35.7% | 3% |
Merck & Co. Inc. (MRK)
Merck is one of the world’s largest pharmaceutical companies. It reported 9% revenue growth in the first quarter, including 20% sales growth from leading cancer drug Keytruda. Sales for Merck’s human papillomavirus vaccine Gardasil were also up 14%. Analyst Geoff Meacham says strong Keytruda sales drove Merck’s first-quarter earnings beat. Meacham expects Merck to continue its momentum in 2024 ahead of key launches, including sotatercept, HER3-DXd and V116. Merck also recently announced a restructuring initiative aimed at improving its manufacturing network and increasing efficiency. Bank of America has a “buy” rating and $135 price target for MRK stock, which closed at $131.20 on April 26.
AstraZeneca PLC (AZN)
AstraZeneca is one of the largest pure-play pharmaceutical companies in the world. Its leading commercial drugs include Tagrisso for lung cancer, Farxiga for type 2 diabetes and Soliris for paroxysmal nocturnal hemoglobinuria and atypical hemolytic uremic syndrome. Analyst Sachin Jain recently raised his 2024, 2025 and 2026 earnings per share (EPS) forecasts for AstraZeneca. Jain says AstraZeneca’s upcoming capital markets day event could be a key catalyst. He anticipates the company will issue new financial guidance out to fiscal 2030, providing substantial financial visibility. Bank of America has a “buy” rating and $91.70 price target for AZN stock, which closed at $75.17 on April 26.
Novartis AG (NVS)
Novartis is an international health care company that produces brand-name and generic pharmaceuticals. Its key products include Cosentyx for psoriasis, ankylosing spondylitis and psoriatic arthritis, Entresto for heart failure, Lucentis for wet age-related macular degeneration and Gilenya for multiple sclerosis. Analyst Graham Parry also recently raised his 2024, 2025 and 2026 EPS estimates for Novartis following its strong first-quarter financial performance and guidance hike. Parry says Novartis is generating impressive EPS momentum and will likely exceed consensus sales growth estimates in the medium term. Bank of America has a “buy” rating and $129 price target for NVS stock, which closed at $97.44 on April 26.
Sanofi (SNY)
Sanofi is a French pharmaceutical company that specializes in atopic allergic disorders, oncology and rare diseases. Its leading drugs include Lantus for treating diabetes and Dupixent for treating atopic dermatitis, asthma and chronic rhinosinusitis with nasal polyps. Sanofi also acquired Provention Bio in 2023, which adds Tzield to Sanofi’s existing diabetes treatment portfolio. Parry says Sanofi exceeded expectations in the first quarter thanks to a strong performance from its insulin portfolio and impressive new product launches. He says the stock is undervalued given its growth prospects. Bank of America has a “buy” rating and $65 price target for SNY stock, which closed at $49.13 on April 26.
Gilead Sciences Inc. (GILD)
Gilead Sciences is a biopharmaceutical company that develops treatments for HIV/AIDS, hepatitis C, liver disease, hematology/oncology and inflammation. Its leading drugs are HIV drugs Biktarvy and Genvoya and antiviral medication Veklury. Meacham recently attended Gilead’s cell therapy event, and he says the potential scalability of Gilead subsidiary Kite Pharma’s cell therapy business is impressive. He is confident in Gilead’s ability to maintain a leadership position in the $40 billion-plus cell therapy market and is optimistic about anito-cel (CART-ddBCMA) in treating multiple myeloma. Bank of America has a “buy” rating and $95 price target for GILD stock, which closed at $65.42 on April 26.
Takeda Pharmaceutical Co. Ltd. (TAK)
Takeda Pharmaceutical is a leading Japanese pharmaceutical company. It has a diversified portfolio of drugs and vaccines, but its top-selling product is Crohn’s disease and ulcerative colitis treatment Entyvio. Analyst Koichi Mamegano says Takeda’s deleveraging efforts will help it continue to invest in growth opportunities. Mamegano says the patent expiration on attention deficit hyperactivity disorder treatment Vyvanse will weigh on Takeda’s near-term earning growth, but the company’s ability to invest in growth initiatives and potentially raise its dividend makes it a compelling investment. Bank of America has a “buy” rating and $16.70 price target for TAK stock, which closed at $13.03 on April 26.
Royalty Pharma PLC (RPRX)
Royalty Pharma is a biopharmaceutical royalty acquisition firm that has more than $30 billion in announced transactions since its founding in 1996. It’s the world’s largest buyer of biopharmaceutical royalties and is the top partner funding life sciences innovation, with more than 60% global market share. Meacham says Royalty has several potential catalysts ahead in 2024, including regulatory updates on Johnson & Johnson (JNJ) major depressive disorder drug candidate seltorexant and Merck schizophrenia drug candidate MK-8189. Royalty Pharma holds royalty interest in both drugs. Bank of America has a “buy” rating and $38 price target for RPRX stock, which closed at $28 on April 26.
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7 Best Pharmaceutical Stocks to Buy for Income originally appeared on usnews.com
Update 04/29/24: This story was previously published at an earlier date and has been updated with new information.
