Here Are 43 Of 84 'Safer' Healthcare High Yield Dividend Equities For June

|
Includes: ABBV, ABT, GILD, GRFS, JNJ, MDT, MTZPY, NVO, NVS, NVSEF, PFE, RHHBY, SNY, TAK, TKPHF
by: Fredrik Arnold
Summary

AbbVie took net gain "safer" June high yield dividend Healthcare honors. Its projected 22.9% net gain is better than Gilead's and way ahead of Novartis's result, per analyst targets of 6/22/18.

43 of 84 Healthcare sector equities were deemed safer because they showed positive 1-year returns and free cash flow yields greater than their dividend yields.

Top 10 "safer" dividend Healthcare yields by GILD, PFE, RHHBY, MTZPY, TKPYY, NVS, NVSEF, ABBV, TKPHF, and SNY ranged from 3.32% to 4.65%. Their free cash flow yields ranged from 3.83% to 11.3%.

Besides safety margin, Healthcare stocks also reported payout ratios (lower is better), total annual returns, dividend growth, and P/E ratios as of 6/22/18 to further validate their financial strengths. Sorting for only positive total returns narrowed the list of 84 to 69.

Analyst 1-year targets identified 10 highest-yield "safer" dividend Healthcare sector stocks netting 31.18% less gain from $5k invested in the lowest-priced five than from $5K invested in all 10. Big high-priced stocks ruled June's "safer" dividend Healthcare equities.

Actionable Conclusions (1-10): Brokers Estimated Top 10 High Yield Healthcare "Safer" Dividend Stocks to Net 9% to 22.98% Gains To June 2019

Five of ten top "safer" dividend Healthcare stocks by yield (shaded in the chart above) were verified as being among the top 10 gainers for the coming year. Thus, based on analyst 1-year target prices, the dog strategy for this Healthcare group graded out as 50% accurate in June.

Projections based on estimated dividends from $1000 invested in the 10 highest-yielding Healthcare stocks, and aggregate 1-year analyst mean target prices for tho stocks, as reported by YCharts, created the 2019 data points. Note: 1-year target prices from one analyst were not applied (n/a).

Ten probable profit-generating trades to 2019 were:

AbbVie (NYSE:ABBV) netted $229.76 based on a median target price estimate from twenty-three analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 62% more than the market as a whole.

Gilead Sciences (NASDAQ:GILD) netted $215.12 based on estimates from twenty-eight analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 15% more than the market as a whole.

Novartis (NYSE:NVS) netted $180.06 based on estimates from five analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 25% under the market as a whole.

Johnson & Johnson (NYSE:JNJ) netted $177.49 based on a median target from twenty-three analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 27% under the market as a whole.

Sanofi (NASDAQ:SNY) netted $176.52 based on a median of estimates from five analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 15% less than the market as a whole.

Novo Nordisk (NYSE:NVO) netted $117.48 based on estimates from two analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 32% less than the market as a whole.

Pfizer (NYSE:PFE) netted $115.58 based on dividends plus median target price estimates from twenty-two analysts less broker fees. The Beta number showed this estimate subject to volatility 9% below the market as a whole.

Grifols (NASDAQ:GRFS) netted $97.49 based on estimates from five analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 24% more than the market as a whole.

Medtronic (NYSE:MDT) netted $96.69 based on median target price estimates from twenty-five analysts, plus projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 6% less than the market as a whole.

Abbott Laboratories (NYSE:ABT) netted $91.08 based on estimates from twenty analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 52% more than the market as a whole

Average net gain in dividend and price was 14.97% on $10k invested as $1k in each of these 10 Healthcare "safer" dividend stocks. This gain estimate was subject to average volatility 4% more than the market as a whole.

The Dividend Dogs Rule

The "dog" moniker was earned by stocks exhibiting three traits: (1) paying reliable, repeating dividends, (2) their prices fell to where (3) the yield (dividend/price) grew higher than their peers. Thus, the highest-yielding stocks in any collection became known as "dogs". More specifically, these are, in fact, best called "underdogs".

The "Safer" Dividend Healthcare Top Yield List Of 43 Included 7 Of 10 Sector Industries

Of 10 healthcare industries composing the sector, 7 were represented by the 43 WallStar firms whose stocks showed margins of cash to cover dividends by this screen as of June 22.

Industry representation broke out thus: Drug Manufacturers - Major (13); Drug Manufacturers - Specialty & Generic (15); Biotechnology (9); Medical Devices (2); Diagnostics & Research (2); Medical Instruments & Supplies (1); Medical Distribution (1); Medical Care (0); Healthcare Plans (0); Long-Term Care Facilities (0).

The first three industries listed above populated the top 10 of the healthcare "safer" equities by yield.

43 of 84 Highest Yield Healthcare Firms Showed "Safer" Dividends

Periodic Safety Inspection

A previous article discussed the attributes of 50 of the 84 top yield Healthcare stocks on this master list.

You see grouped below the green-tinted list of 43 that passed the Healthcare WallStar "safer" check with positive past-year returns and cash flow yield sufficient to cover their anticipated annual dividend yield. The margin of cash excess is shown in the boldfaced "Safety Margin"column.

Financial outcomes, however, are easily readjusted by boards of directors tinkering with company policies cancelling or varying the payout of dividends to shareholders. For example, Sanofi has paid a variable annual dividend over the years, as has Novartis. Pfizer, on the list below, cut its dividend in half in 2009 due to economic conditions, despite strong cash flow.

Three additional columns of financial data, listed after the Safety Margin figures above, reveal payout ratios (lower is better), total annual returns, dividend growth, and P/E ratio levels for each stock. This data is provided to reach beyond yield to select reliable payout stocks.

Limiting candidates to only those showing positive total annual returns, for example, narrowed the 84 on this list to 69 for this article. Positive results in all five columns after the dividend ratio is remarkable as a solid financial signal.

To quantify top rankings, analyst mean price target estimates provided a "market sentiment" gauge of upside potential. Added to the simple high yield metric, analyst mean price target estimates became another tool to dig out bargains.

Yield Metrics Revealed No Bargains From 5 Lowest-Priced Top 10 Yielding "Safer" Dividend Healthcare Equities

Ten "safer" dividend Healthcare stocks with the highest yields June 22 per YCharts data ranked themselves by yield as follows:

Actionable Conclusions: Analysts Predicted 5 Lowest-Priced of 10 "Safer" Dividend High Yield Healthcare Sector Stocks Will (11) Deliver 7% Vs. (12) 10.18% Net Gains from All 10 by June 2019

$5000 invested as $1k in each of the five lowest-priced stocks in the 10 "safer" dividend Healthcare Sector pack by yield were determined by analyst 1-year targets to deliver 31.18% less gain than $5,000 invested as $.5k in all 10. The tenth-lowest priced "safer" dividend Healthcare dog, AbbVie (ABBV) showed the best net gain of 22.96%, per analyst targets.

The five lowest-priced "safer" dividend Healthcare equities as of June 22 were Mitsubishi Tanabe Pharma Corp. (OTCPK:MTZPY), Takeda Pharmaceutical (TKPYY), Roche Holding (OTCQX:RHHBY), Pfizer (PFE), and Sanofi (SNY), with prices ranging from $17.05 to $40.00.

Five higher-priced "safer" dividend Healthcare equities as of June 22 were Takeda Pharmaceutical (OTCPK:TKPHF); Gilead Sciences (GILD); Novartis (OTCPK:NVSEF); Novartis (NVS); AbbVie (ABBV)), with prices ranging from $40.24 to $93.49. This month, the big, high-cost "safer" dividend stocks ruled this kennel.

This distinction between 5 low-priced dividend stocks and the general field of 10 reflects the "basic method" Michael B. O'Higgins employed for beating the Dow. The added scale of projected gains based on analyst targets contributed a unique element of "market sentiment" gauging upside potential. It provided a "here and now" equivalent of waiting a year to find out what might happen in the market. It's also the work analysts got paid big bucks to do.

Caution is advised, however, as analysts are historically 20-80% accurate on the direction of change and about 0-20% accurate on the degree of change.

The net gain estimates mentioned above did not factor in any foreign or domestic tax problems resulting from distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.

See my instablog for specific instructions about how to best apply the dividend dog data featured in this article, this glossary instablog to interpret my abbreviated headings, and this instablog to aid your safe investing.

The stocks listed above were suggested only as possible starting points for your safest "Safer" Healthcare dog dividend stock research process. These were not recommendations.

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 YCharts. com; Yahoo Finance; analyst mean target price by Thomson/First Call in YahooFinance. Dog photo: animalpetdoctor.homestead.com

Disclosure: I am/we are long MFCSF, PFE. 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.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.