A portfolio of biotech stocks is usually full of risk. One way to offset this risk is to include some of the pharmaceutical giants that have long ago experienced their "pop", but now have healthy dividends to offer investors. These large companies have extensive product offerings, make partnerships with smaller companies to get more products to advance and even buy some of these smaller companies to acquire their products or pipeline. Since these companies have already experienced success with the FDA long ago, their ability to maintain growth and shareholder value is more about sound fundamentals. These eight stocks measure up nicely with great dividends and solid books but keeping share values and dividend payments up is the real battle these giants face. Below is a glance at eight biotech stocks with higher yielding dividends.
|Company||Share Price||Current Yield||Market Cap||P/E||EPS|
|AstraZeneca (NYSE:AZN)||49.15||7.73%||61.35 B||9.30||4.98|
|GlaxoSmithKline (NYSE:GSK)||46.44||5.94%||125.33 B||25.00||1.83|
|Merck (NYSE:MRK)||43.90||3.92%||132.68 B||22.20||1.99|
|Novartis (NYSE:NVS)||70.83||3.57%||171.45 B||18.30||3.89|
|Bristol-Myers Squibb (NYSE:BMY)||40.39||3.47%||66.13 B||35.40||1.14|
|Eli Lilly (NYSE:LLY)||55.57||3.53%||63.29 B||15.10||3.66|
|Pfizer (NYSE:PFE)||28.38||3.38%||203.93 B||14.60||1.94|
|Sanofi-Aventis (NYSE:SNY)||50.69||3.67%||134.16 B||27.10||1.87|
Looking at the first round of numbers makes a good case for AstraZeneca with its high yielding dividend payout, strong profit or earnings and the lowest market cap of the group. Bristol-Myers, by comparison has a similar market cap, yet a P/E ratio that is almost four times higher and an EPS almost five times lower. Bristol-Myers seems to be having a little harder time squeezing out a profit and might be a little overpriced. GlaxoSmithKline and Sanofi-Aventis are also on the high side for P/E ratio and low side for EPS indicating that either earnings are not up to par or the share price is a little too high. Let's take a look next at share prices and performance.
|Company||Share Price||52-week Low||52-week High||1-Year Target||Beta|
The volatility of all these stocks is relatively low with only Sanofi-Aventis experiencing a beta value over 1, but not by much. GlaxoSmithKline has been incredibly stable during the past year and both AstraZeneca and Bristol-Myers Squibb are not too far behind. Sanofi-Aventis and Novartis have had some major upward movements in the past year that really pushed up their share prices. Merck is the only one of the eight that is not near its 52-week high or 1-year target. Sanofi-Aventis is one of the few here having a 1-year target price much higher than its current share price, but its P/E ratio is already one of the top three in the group. Bristol-Myers Squibb has exceeded its 1-year target price and adding in a P/E ratio of 34.82 doesn't exactly make it bargain priced. Next we will take a look at revenue growth and dividend safety.
|Company||2010-12 Revenue Growth||PEG Ratio||Payout Ratio||Current Dividend Yield||5-year Dividend Yield Ave|
AstraZeneca, Bristol-Myers Squibb, GlaxoSmithKline and Pfizer have all experienced some pretty significant decreases in revenue lately. AstraZeneca even has a negative PEG ratio along with Eli Lilly. Three potential problems exist for Bristol-Myers Squibb. Negative revenue growth, a PEG ratio that is the second highest of this group and a payout ratio above 100% (117%) all are bad signs for Bristol-Myers Squibb. Their current dividend yield of 3.47% is below the 5-year dividend yield average of 4.60%. GlaxoSmithKline is also looking at decreased revenues, a high PEG ratio for the group and a payout ratio of 84%. AstraZeneca has the highest dividend yield, but negative revenue growth and that negative PEG ratio are a bit of a concern. Novartis seems to be in the best position here with good revenue growth, a decent PEG ratio, a middle of the road 64% payout ratio and a current dividend above its 5-year average. Sanofi-Aventis also has revenue growth, the lowest PEG ratio of the group and a modest dividend yield of 3.67% that is average for the group at 68%.
Most of these stocks have seen their values rise to new highs as the market has moved along with them, but growth has been harder to achieve. Bristol-Myers Squibb is not the safest of the bunch and with one of the lowest dividend yields, the others appear to be safer bets. AstraZeneca has no problem with earnings and has that healthy dividend, great P/E ratio and EPS, but does have to deal with the fallout from a less than glamorous 2012. Novartis has some pretty solid numbers for this group and could experience growth with its dividend and share price. Novartis might just be the sleeper of the group worth further attention.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.