Pfizer On The Rebound?
Pfizer was a dividend offender back in 2009 as the company was scrambling for ways to conserve cash in the wake of its massive Wyeth acquisition, but the company did raise its dividend last year and the yield currently rests around 4%. The capital appreciation has been there, too, as Pfizer has risen 12% year-to-date, double the performance of the Dow Jones Industrial Average of which Pfizer is a member. Several of Pfizer's biggest drugs come off patent this year and while we don't make guarantees, the company may be inclined to raise the dividend again this year to keep investors appeased.
We Love This Kind Of Consistency
Abbott Laboratories (NYSE: ABT) is everything an income investor should be looking for in ANY sector, but it is a pharma dividend stand out. Adjusted for stock splits, Abbott's annual dividend has risen from around 25 cents in 1989 to $1.92 a share today. Abbott is another name working on a multi-decade streak of annual dividend hikes and that includes an increase in 2010.
It's hard to argue that Abbott is one of the higher-quality names in the pharma sector and the stock is cheap at 10 times forward earnings. The dividend appears safe as Abbott's pay out ratio is 58% and the company has the balance sheet to support future dividend hikes.
Lilly's High Yield
With a yield of 5.7%, Eli Lilly (NYSE: LLY) is the top yielder among major blue-chip pharma stocks and like Pfizer, it faces some issues with an important patent expiration later this year. As the chart below indicates, Lilly had been steadily growing its dividend prior to the onset of the financial crisis, but there hasn't been a dividend increase since 2009. Still, with a P/E ratio below eight and a payout ratio of 50%, this would be a pharma name for conservative, income-minded investors to consider.
Overall, in the absence of new marquee drugs and pipelines that leave something to be desired, dividends are once again the most compelling reason to consider big pharma. The set of challenges facing the group is nothing new, so it can be argued that the worst news is already priced into these stocks, meaning any bit of news could provide capital appreciation on top of tidy dividends.
How to Profit from the "Perfect Storm" in the Financial World
A certain confluence of events have created the ideal scenario for investing in a handful of high-yield, dividend-paying stocks.
These safe, cash-gushing companies paid our subscribers 62% in yields plus share price appreciation in 2009.
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Global Profits Alert (GPA) is published by Trippon Financial Research, Inc. a financial media organization with offices in the United States, Hong Kong and Mainland China. GPA is written by Jim Trippon in conjunction with George Wolff, Sunny Wang, Todd Shriber, Kelley Damiani and J. Daryl Thompson.
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