Dividend Dogs Of Healthcare: A 29.17% Advantage For The 5 Lowest Price High Yield Stocks

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Includes: AZN, GSK, INVA, MRK, PDLI, PETS, PFE, SNN, SNY, VIVO
by: Fredrik Arnold

Summary

Top ten Healthcare dividend stocks by yield showed 29% higher net gain from a $5k investment in the lowest priced five than from an equal amount invested in all ten.

Annual dividends divided by closing stock prices as of November 28 determined yields. Analyst net targets were used to calculate gains one year hence.

Five lowest priced highest yield stocks of the Healthcare dividend team were: PDLI; PETS; THRX; VIVO; PFE. Five higher priced stocks completing the ten were: SNN; GSK; SNY; MRK; AZN.

Consider these stocks as starting points for your early December Healthcare dividend stock investment research.

Top Ten For the Money

This article refines and distinguishes an earlier report that revealed Healthcare dividend bargain stocks to buy and hold from December to May, or perhaps as long as one year. See Dow 30 article for explanation of the term "dogs" for stocks reported based on Michael B. O'Higgins book "Beating The Dow" (HarperCollins, 1991), now named Dogs of the Dow. O'Higgins system works to find bargains in any collection of dividend paying stocks. Utilizing analyst price upside estimates expanded the stock universe to include popular growth equities, as desired.

Dog Metrics Extracted Bargains

Ten dividend paying stocks as of market closing November 28 were culled from the equities that constitute the Healthcare dividend kennel. Yield (dividend / price) results verified by Yahoo Finance did the ranking.

Top ten healthcare sector dogs showing the biggest dividend yields by this screen as of November 28 represented five industries: (1) biotechnology, (2) drug manufacturers - major, (3) drug delivery, (4) diagnostic substances, (5) medical appliances & equipment. Top healthcare sector stocks by yield were two biotechnology firms, PDL BioPharma, Inc. (NASDAQ:PDLI) [1], and in second, Theravance Inc. (THRX) [2]. One drug delivery firm took fourth, PetMed Express (NASDAQ:PETS) [4]. A lone diagnostic substances firm placed fifth, Meridian Bioscience, Inc. (NASDAQ:VIVO) [5]. The only medical appliances and equipment firm, took seventh place, Smith & Nephew PLC (NYSE:SNN) [7].

The remaining five drug manufacturers - major arranged themselves in third, sixth, and eighth through tenth places: GlaxoSmithKline PLC (NYSE:GSK) [3], Sanofi SA (NYSE:SNY) [6], AstraZeneca (NYSE:AZN) [8], Pfizer (NYSE:PFE) [9], Merck & Co., Inc. (NYSE:MRK) [10]. These completed the top ten November healthcare dogs by yield.

Actionable Conclusion: (1) Analysts Assert 5 Lowest Priced of Top Ten Highest Yield Healthcare Dividend Dogs Deliver 14.27% vs. (2) 11.05% Net Gains by All Ten by November 28, 2015

$5000 invested as $1k in each of the five Lowest priced stocks in the top ten Healthcare dividend kennel by yield were predicted by analyst 1 year targets to deliver 29.17% more net gain than $5,000 invested as $.5k in each of all ten. The third lowest priced Healthcare dividend dog, Theravance Inc., was projected to deliver the best net gains of 50.02%.

Lowest priced five Healthcare dividend dogs for November 28 were: PDL BioPharma, Inc., PetMed Express Inc., Theravance Inc., Meridian Bioscience, Inc., and Pfizer whose prices ranged from $8.14 to $31.15.

Higher priced five Healthcare dividend dogs for November 28 were: Smith & Nephew PLC, GlaxoSmithKline PLC, Sanofi SA, Merck, and AstraZeneca whose prices ranged from $34.71 to $74.17.

This distinction between the five low priced dividend dogs and the general field of ten reflects Michael B. O'Higgins "basic method" for beating the Dow. The added scale of projected gains based on analyst targets adds a unique element of "market sentiment" gauging upside potential. It's a here and now equivalent of waiting a year to find out what will happen in the market. Analysts are historically 20% to 80% accurate on the direction of change and about 0% to 20% accurate on the degree of the change.

The stocks listed above were suggested only as decent starting points for a Healthcare Sector dog dividend stock purchase/sale research process in early December 2014. These were not recommendations.

Gains/declines as reported do not factor in any tax problems resulting from dividend, profit, or return of capital distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.

Disclaimer: This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, recommendation or endorsement to buy or sell any security. Prices and returns on equities in this article except as noted are listed without consideration of fees, commissions, taxes, penalties, or interest payable due to purchasing, holding, or selling same.

Graphs and charts were compiled by Rydlun & Co., LLC from data derived from www.dividend.com, finance.yahoo.com, analyst mean target price by Thomson/First Call in Yahoo Finance.

Disclosure: The author is long PFE.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.