Investors seeking out dividend yields should consider shopping around in the pharmaceutical sector for quality stocks for their portfolio. There are at least five stocks on offer with yields in excess of 4%.
The sector is topped by Eli Lilly & Co (LLY) which offers an attractive 5.28% dividend yield. The stock also trades on an undemanding price to earnings multiple of 9 times earnings.
Second up is Bristol-Myers Squibb (BMY) which trades on a PE multiple of 14 times earnings and a yield of 4.7%.
The third option for shareholders would be Pfizer (PFE) with a yield of 4.4% and PE multiple of 14 times earnings.
Merck & Co (MRK) offers 4.4% and an historic PE of 8.6 and last but not least is Roche Holdings (RHHBY) which offers investors 3.8%.
What is clear from the above is that the pharmaceutical sector offers not only good yields, but globally recognized companies on undemanding historical price to earnings multiples.
While much of the commentary from the pharmaceutical firms is around cost containment, many of the big name players are spending a lot of time focusing on and growing their product pipelines once again.
Commenting on Lillys (LLY) 9% growth in revenue in the second quarter of 2010, John C. Lechleiter Ph.D., Lilly’s (LLY) chairman and chief executive officer told investors: "We’re pleased with these results and the opportunities they create. This strong financial performance enables us to fund our R&D pipeline of nearly 70 clinical stage assets and make strategic acquisitions in order to deliver an increased number of innovative medicines to patients in the future.”
Pfizer (PFE) was similarly upbeat reporting that second quarter earnings had jumped by 58% $17.3bn following the acquisition of competitor Wyeth. Frank D’Amelio, Chief Financial Officer of Pfizer (PFE) told shareholders that the company had spent $500m buying Pfizer (PFE) shares in the first half of 2010. He advised investors: "Given the continued strength of our balance sheet and significant operating cash flow, we remain confident that we have the financial wherewithal to successfully execute our strategies and continue to meet our financial objectives."
Roche (RHHBY) also delivered a strong first half showing sales were up 5% in local currencies (3% in Swiss francs; 7% in US dollars) to 24.6bn Swiss francs and operating profit up 11%. "Based on our good half-year results, we confirm our full-year outlook for 2010: we expect mid-single-digit sales growth for the Roche Group and the Pharmaceuticals Division in 2010," advised Severin Schwan group chief executive.
If you are a dividend seeking investor looking for strong global brands and stocks which are defensively positioned then shopping around in the pharmaceutical sector may offer some rewards.
Add your Comment
or use your BestCashCow account