When calculated, an average dividend stock in the S&P 500 Index pays a yield of just over 2.13%. In such conditions, finding stocks that have good payouts can be a daunting task. But do not worry; there are still some stocks in the pharmaceutical field that pay pretty good dividend yields.
Increase in the prices of older drugs has caused public outrage which cast dark clouds all over the pharma sector. As a result, the share prices of most pharma companies have fallen like a pack of cards. Hence, for savvy investors, this is the right time to grab stocks from some of these big pharma companies, which are now selling low, but are quite capable of paying back high.
F. Hoffmann-La Roche, a Switzerland based big pharma company, offers a healthy dividend yield of 3.4% and has been continuously raising its payouts since last 29 years without fail. More importantly, with the kind of breakthroughs it is achieving in the field of therapies, Roche could keep this dividend raising streak going for years to come.
It’s been a few years since the US FDA has granted a new designation known as “Breakthrough Therapy” for pharma candidates that have been seriously working on improving the existing therapies in an attempt to provide better medical assistance to the patients suffering from serious health conditions. Roche has been relentlessly working on improving existing therapies and now holds 14 such designations, more than any other company in the pharma industry.
Last year, Roche paid 58.7% of its profits in dividends, and is expected to have a single digit profit growth this year. In 2016, the company might be making a modest payout in an attempt to save its dividend payout ratio from falling into the danger zone. Nevertheless, with contributions from breakthrough drugs like Tecentriq and Ocrevus, it is expected that the company will be attracting even more business as well as patient investors in the near future and will sure be awarding its shareholders promptly for their patience.
AbbVie (NYSE: ABBV)
After getting separated from Abbott (NYSE:ABT) in 2013, AbbVie has raised its quarterly payout to $0.57 per share, a massive increment of 42%.
With a dividend yield of 3.6% at the stock’s current price, it works out to be a nice deal to buy some of its shares. It can prove to be even more beneficial to invest in the company as there is another dividend increase waiting around the corner.
The company has been improving its distribution for 44 years now, and it has to increase its dividend payout in the next quarter as well if it were to keep its dividend raising streak.
In the last quarter, the company has raised its payout to a whopping 11.8%, and with the kind of cash flow the company is generating, next quarter payout might just see yet another double digit hike. AbbVie has only used 46.4% of its overall cash flow to make dividend payments in the last four quarters.
Novo Nordisk (NYSE: NVO)
Between 1980 and 2014, the number of people suffering from diabetes has increased fourfold across the world. According to recent statistics, the number has now crossed 425 million.
Novo Nordisk has always kept itself updated with the changing trends in the diabetic field and it is now one the biggest manufacturers of insulin in the world, with 46% share of the insulin market. This has made it one of the most profitable big pharma companies in Denmark and across the world.
Express growth, continuous innovations in the field of diabetic medicines and accurate cash allotment have all allowed the Danish company to grow at an amazing pace. The annual payout of Novo Nordisk has increased at an overwhelming rate of 24.8% in the last ten years.
In spite of increasing its dividend payout by 28% this year, Novo Nordisk still has plenty of cash flow to increase its payout even more this quarter. In general, using 60% to 70% of the profits to pay dividends is considered a normal practice. But this debt-free company has to use only 46.6% of its profits even to pay that kind of a huge dividend.