7 High-Yield Large-Cap Pharmas: Recent Performance And Yield Review

by: Zvi Bar

Many investors appreciate the pharmaceutical manufacturer industry for its potential to produce both income and long-term growth. Several large-cap drug makers offer above-average yields, and have records of growing their business and payouts over the long term.

Historically, many drug markers have acted resiliently during economic downturns and recessions. These companies are often considered defensive stocks. They still can go down in share value, but many believe that this industry currently represents a strong long-term value, as several of these companies will continue to pay substantial dividends, benefit from emerging market growth and continue to develop new medical advancements. Additionally, medical price increases tend to outpace inflation.
Below are seven drug manufacturers that have a market capitalization of at least $40 billion and yields above the Dow Industrial Averages 2.44% and S&P 500s 1.93%. Most now provide double these yields, and these companies traditionally keep their dividends above average. I have also included their one-month and 2011-to date performance rates, as well as their five-year dividend histories.
AstraZeneca (NYSE:AZN)
  • Yield: 5.77%
  • One-month: -0.81%
  • 2011-to-date: 1.28%

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Bristol-Myers Squibb (NYSE:BMY)
  • Yield: 4.53%
  • One-month: 3.85%
  • 2011-to-date: 9.97%

Eli Lilly (NYSE:LLY)
  • Yield: 5.27%
  • One-month: 0.03%
  • 2011-to-date: 6.08%

GlaxoSmithKline (NYSE:GSK)
  • Yield: 5.14%
  • One-month: -4.26%
  • 2011-to-date: 7.57%

Merck (NYSE:MRK)
  • Yield: 4.65%
  • One-month: -0.62%
  • 2011-to-date: -9.27%

Pfizer (NYSE:PFE)
  • Yield: 4.24%
  • One-month: 4.08%
  • 2011-to-date: 7.82%

Sanofi-Aventis (NYSE:SNY)
  • Yield: 5.05%
  • One-month: -2.33%
  • 2011-to-date: 11.94

Many of these companies appreciated considerably since the recent market bottom. Additionally, six of these companies are positive so far in 2011. Further, it appears likely that several of these companies will institute dividend increases in the coming quarters, which could act as a catalyst for share prices. Nonetheless, this group already provides an income investor a yield comparable to a long-term bond, with far greater prospects of capital appreciation and yield growth.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.