Thursday July 12, 2012
by Ian Wyatt, editor Daily Profit
We can debate America's healthcare system; but the simple fact of the matter is that all of us require healthcare at some point in our lives. That's why the healthcare industry is one of the most profitable sectors on the planet.
And with so much cash on hand, healthcare stocks are typically among the most reliable and generous dividend payers on the market. Here's four that pay more than 4% in dividends.
The average dividend yield among healthcare stocks in 2011 was 3.7%, trailing only telecom (5.9% yield) and the ever-reliable utilities (4.1%). Better yet, healthcare stocks posted an average gain of 6.6% last year during a time when the S&P 500 was flat.
Knowing that demand for quality healthcare isn't going anywhere, some of the major players in the healthcare industry should continue to rake in cash even in a down economy.
And as the cash flows, it's reasonable to think that healthcare stocks will remain one of the highest-yielding sectors on the market.
Novartis (NVS) is a multi-national pharmaceutical company based in Switzerland. The company boasts a $131 billion market cap, a profit margin of 14.6%, and $15 billion in operating cash flow.
That's how Novartis manages to pay a generous annual dividend of $2.48 per share - a payout the company has increased every year since 1996. In fact, Novartis' dividend -- now yielding 4.5% -- has more than doubled from $1.15 per share since 2005.
With profits rising for each of the last three years and given the company's diverse inventory of drugs (treating everything from cancer to multiple sclerosis to diabetes), Novartis should continue to be a steady dividend payer for years to come.
Merck & Co. (MRK) bumped its quarterly dividend up to 42 cents per share in December, up from 38 cents a share. it now yields 4.2%;
An agreement to extend its partnership with AstraZeneca -- which sells the widely popular acid reflux drugs Nexium and Prilosec -- for another two years is expected to fetch the company an additional $200 million in revenue.
GlaxoSmithKline (GSK) sells many familiar prescription and over-the-counter drugs GlaxoSmithKline sells. Nicoderm, Advair and Wellbutrin are among them. That's why the British company is currently the No. 2 pharmaceutical manufacturer in the world.
Its 4.8% yield may seem high - but that's been its average for the past five years. That makes GlaxoSmithKline the leading dividend payer by yield among large-cap pharmaceutical stocks.
Eli Lilly & Co. (LLY) has long been one of the global leaders in the pharmaceutical industry. It sells its products in more than 100 countries, and has been in business since 1876.
The company has paid a dividend for almost the entirety of its existence - 126 years. While the company has been slow to grow its dividends of late -- the quarterly payout has been stuck at 49 cents a share since 2009 -- prior to that Eli Lilly had raised its dividends for 42 straight years.
Even if there's no increase in sight, you could do worse than the stock's nearly $2-per-share annual payout and 4.7% yield.
Learn more about this financial newsletter at Ian Wyatt's Daily Profit.