Investors looking for high-dividend stocks to buy now should turn their attention to the healthcare sector: three relatively reliable drugmakers are trading near their 52-week lows.
Their stock prices may have fallen, but it’s more than likely that better days are ahead. Here’s how these stocks could produce huge passive income for patient investors who buy now.
1.Pfizer
Actions of Pfizer (NYSE:PFE) have fallen about 55% from their peak in early 2022. At recent prices, they offer a staggering 6.2%. dividend yield. In a nutshell, the stock fell because sales of its COVID-related products fell much faster than expected.
Investors looking for income will be happy to know that Pfizer knows how to handle periods when sales of a few of its drugs are declining rapidly. The pharmaceutical giant has been able to increase its dividend every year since 2009, and this isn’t the first time some of its main revenue streams have suddenly dried up.
Despite declining sales of its COVID-19 products, management expects adjusted earnings of between $2.15 per share and $2.35 per share this year. This will be more than enough to cover a dividend currently set at $1.68 per share per year.
Investors can reasonably expect another 15 years of steady payout increases from Pfizer. The Food and Drug Administration has approved a record nine new drugs for the company in 2023, and those aren’t even its only new revenue streams. In 2023, Pfizer acquired Seagen, a cancer drug developer with four marketed therapies.
2. Johnson & Johnson
Johnson & Johnson (NYSE:JNJ) the stock is down about 22% from the all-time high it hit in 2021. In April, the pharmaceutical and medical technology company increased its dividend payout for the 62nd consecutive year.
J&J also experienced COVID-19-related product sales that fell as quickly as they rose, but that didn’t stop it from raising its dividend 30.5% over the past five years. At recent prices, Johnson & Johnson shares are yielding a nice 3.4%.
Shareholders can expect larger distribution increases. Last year, Johnson & Johnson completed the spinoff of its relatively slow-growing consumer goods segment into a new company named Kenvue. This year, management expects adjusted earnings per share to rise 7.7%, midway through its forecast range.
A lot could happen over the next 62 years, but investors can reasonably expect at least another decade of significant dividend growth from J&J as its various businesses prosper. For example, in the first quarter, sales of the company’s Impella heart pumps climbed 15% year over year, and no competing devices are on the horizon.
Medical technology isn’t the only operating segment firing on all cylinders for J&J these days. Including the impact of COVID-19 vaccine sales, its pharmaceutical revenue increased 8.3% year-over-year in the first quarter.
3. Bristol Myers Squibb
Actions of Bristol Myers Squibb (NYSE:BMY) have fallen about 50% from the peak reached in late 2022. At its beaten-down price, the pharmaceutical stock offers a dividend yield of 5.9%.
In December, Bristol Myers Squibb increased its quarterly payout for the 15th consecutive year, and those payout increases were larger than those offered by most of its peers. The pharmaceutical company has increased its payouts by 46% over the past five years.
The stock market hit shares of Bristol Myers Squib in part because it posted a hefty $11.9 billion loss in the first quarter. This loss was due to a $12.9 billion charge recorded for acquired in-process research and development (IPR&D), in other words, issues related to recent acquisitions. In the first quarter alone, it completed transactions with four companies, including Karuna Therapeutics.
Karuna is developing a next-generation treatment for schizophrenia called KarXT, which has already been shown in clinical studies to significantly improve symptoms. The Food and Drug Administration is reviewing it and its decision is expected to be announced no later than September 26.
Bristol Myers Squibb generated $12.5 billion in free movement of capital over the past year and only needed 38% of that to cover its dividend payments. With potential help from KarXT and a handful of other recently acquired candidates in late-stage development, another 15-year streak of dividend increases is not an unreasonable expectation.
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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool ranks and recommends Bristol Myers Squibb, Kenvue and Pfizer. The Motley Fool recommends Johnson & Johnson and recommends the following options: Long January 2026 $13 calls on Kenvue. The Mad Motley has a disclosure policy.
3 High-Yielding Dividend Stocks Near Their 52-Week Lows to Buy and Hold was originally published by The Motley Fool
