With healthcare costs rising in the U.S., it seems as if the new drugs will have to follow suit. Big pharmaceutical companies are usually attractive since no matter the market conditions the need for their product is always present.
During the start of the pandemic, large inflows into pharmaceutical stocks have been noticed as traders and investors tried to position their portfolios to benefit from the new Covid-19 strain. However, long-term investors usually like the sector because of the stable dividends the biggest players in the space offer.
Hence, Finbold has researched and identified two large-cap pharma stocks, which sport a solid dividend yield.
Abbvie (NYSE: ABBV)
The company’s most profitable drug to date, Humira, which is also the most popular rheumatoid arthritis drug on the market is slowly ending its cycle. Yet, Abbvie is not resting on its laurels instead they’re taking a much more diversified approach to their drug pipeline preparing more new products to come to market once biosimilars to Humira start coming out after the patent for the drug runs out in 2023.
In consequence, ABBV results for Q1 showed adjusted earnings per share (EPS) of $3.16, which represented an increase of 9.3%, year-over-year (YoY) with revenues for the quarter hitting $13.54 billion, an increase of 4.1% YoY. The immunology segment, where Humira is, represented the largest selling segment of the company for the quarter.
Meanwhile, the company offers investors a 3.75%, dividend yield, which is safe in the short-term thanks to the recent results, but also possibly in the long run with a diversified pipeline of drugs coming out. Presently, the shares are up 31% year-to-date (YTD) but have seen a slight pullback in the more recent sessions, possibly offering an entry position for dividend investors.
Glaxo Smith Kline (NYSE: GSK)
GSK is one of the eight largest pharmaceutical companies in the world focusing on cancer, respiratory, and immune/inflammatory diseases.
In the latest earnings, the company showed increased sales, rising 32% YoY to￡9.78 billion (~$12.3 billion), beating estimates by ￡950 million (~$1.1 billion). As a result, the EPS was ￡0.328, beating expectations by ￡0.039, which led the company to affirm its 2022, guidance.
On May 27, the company received approval from China for their Cervarix vaccine against cancer-causing human papillomavirus. Similar to ABBV, GSK has a promising pipeline and numerous announced projects most notable of which is the spin-off of their consumer part of the business, which should make the company leaner. Meanwhile, investors can enjoy a 4.47% dividend yield offered by the company.
Consequently, shares are up 14% YTD, currently trading above all daily Simple Moving Averages. On the daily chart, a double top could be noted with steady volumes, which could indicate a reversal of momentum but possibly to the upside due to recent positive news surrounding the company.
Clearly, debilitating headwinds have hammered the markets resulting in investors pulling out of risky investments. Nevertheless, investing in dividend-paying large-cap stocks seems to always be a popular strategy among investors looking to augment their income.
Looks like this time around it is no different as the pharma sector has performed admirably in the market sell-off. The above two companies have shown solid revenues and growth with the potential to come up with blockbuster drugs in the future, which will make consumers’ and shareholders’ lives easier.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.