3 of the Most Attractive Dividend Stocks in the Pharma Space

Stocks to buy

In the realm of investment, pharma dividend stocks are a beacon for both stability and growth. This sector not only enhances the quality of life on a global scale but also presents lucrative opportunities for long-term investors.

Moreover, given the evergreen nature of healthcare demand which remains sturdy across economic cycles, pharma businesses exhibit remarkable resilience. They channel substantial investments into research and development. And, they effectively pave the way for innovative treatments and potential blockbuster drugs. Often, such advancements lead to substantial revenue boosts, reflecting positively on stock market performance.

Moreover, for investors, pharma stocks that pay dividends are incredibly enticing. They offer the dual advantages of potential capital appreciation and the allure of consistent dividend income.

AbbVie (ABBV)

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In the dynamic realm of pharmaceuticals, AbbVie (NYSE:ABBV) stands out with its strategic pivot away from Humira dependency. Its stellar growth platform, with stars such as Skyrizi, Rinvoq, Vraylar, and Botox, proves to be a game changer. Particularly, Skyrizi and Rinvoq have delivered over 50% operational growth in its most recent quarter. This underscores the firm’s adept move into diverse therapeutic realms.

Moreover, AbbVie’s expansion into sectors like immunology, neuroscience, oncology, and aesthetics is paying off immensely. For instance, neuroscience and oncology have demonstrated impressive operational sales growth north of 20%.

Additionally, the company has a stronghold in specific market segments, like Skyrizi’s dominance in the psoriasis market. This highlights its ability to not only compete but also lead in highly competitive spaces. Therefore, AbbVie’s journey from reliance on a single blockbuster to becoming a diversified powerhouse is a blueprint for success in the ever-evolving pharma landscape. It yields an attractive 4.1%, growing its dividend payout for over a decade.

Johnson & Johnson (JNJ)

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Johnson & Johnson (NYSE:JNJ) is a true behemoth in the pharma and medical devices industry, which continues to be a bedrock for investors.

Its dogged consistency is exemplified by the recent dividend hike this April. This marks an extraordinary 61 years of consecutive dividend increases. This feat is a testament to J&J’s commitment to delivering value to its shareholders.

The secret to J&J’s enduring success lies in its strategic internal diversification. With an array of pharmaceutical and medical device products in its portfolio, J&J has consistently navigated market fluctuations. The recent spin-off of its consumer wellness business, Kenvue signals a strategic shift, streamlining the firm’s focus on high-growth areas.

Financially, J&J’s performance is nothing short of amazing. A year-over-year (YOY) top-line growth rate of 16.3% puts it well above the sector median. This demonstrates the company’s exceptional market positioning. Its A-graded profitability profile, boasting impressive metrics like a 35% net income margin, 19% return on common equity, and 21% levered FCF margin, speaks volumes about its financial health. Additionally, it boasts a dividend yield of 3.08% and a 6% growth in dividends, surpassing both the sector median and its five-year historical average. Truly, J&J continues to be a model of financial stability and shareholder value.

Pfizer (PFE)

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In the ever-evolving bio-pharmaceutical industry, Pfizer (NYSE:PFE) emerges as a compelling long-term investment, especially for dividend-focused portfolios. Amidst a shifting market landscape post-Covid, Pfizer’s stock trades at a significant bargain. And this presents a unique opportunity for investors.

A key attraction for Pfizer is its powerful pipeline of new products in its portfolio. With plans to launch up to 18 new products through the first half of 2024 alone, it has an expected $20 billion in incremental sales from new molecular entities by 2030. Pfizer is not just staying relevant – it’s aggressively forging a path toward long-term growth. The company’s strategic moves include the acquisition of cancer drug maker Seagen for a whopping $43 billion. PFE is poised to further bolster its sales by an additional $25 billion by 2030.

For dividend investors, Pfizer’s figures are particularly attractive. Its forward dividend yield stands at a healthy 5.70%, with a five-year dividend growth rate of 4.95%. It owns a history of 13 years of dividend growth. Furthermore, as the sector regains the market’s attention, Pfizer, currently at oversold levels, is likely to experience a significant uptick in value. Hence, it stands as an attractive proposition for both growth and income investors.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

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