The pharmaceutical industry has benefited from much investor attention amid the COVID-19 pandemic. And pharma companies worldwide are now ramping up their research and development efforts to provide more and better healthcare solutions.
Investors’ interest in pharmaceutical stocks is evident in Invesco Dynamic Pharmaceuticals ETF’s (PJP) and iShares U.S. Pharmaceuticals ETF’s (IHE) 20.4% and 15.7% returns, respectively, over the past year. With consistent product innovations and a growing need for critical-disease therapies, the industry is expected to keep growing in the near- to midterm. According to a Fortune Business Insights report, the pharmaceutical market is expected to hit $2.2 trillion in aggregate sales by 2027.
In addition to holding solid growth prospects, pharmaceutical companies that pay dividends are lucrative buys amid current market volatility. So, we think it could be wise to bet now on dividend-paying pharma companies Pfizer Inc. (PFE), AbbVie Inc. (ABBV), and Eli Lilly and Company (LLY), which are well positioned to continue growing.
Click here to checkout our Healthcare Sector Report for 2021
Pfizer Inc. (PFE)
One of the top players in the biopharmaceutical space, PFE became almost synonymous with COVID-19 vaccine development because its vaccine candidate became the first to receive emergency use authorization (EUA) from the United States Food and Drug Administration (FDA). The company offers medicines and vaccines in various other therapeutic areas too, including cardiovascular, metabolic, and pain, under several brands, which include the Eliquis, Chantix/Champix, and Premarin family brands.
PFE has declared a $0.39 quarterly dividend per share, payable on June 4, 2021. PFE’s dividend pay-outs have grown at a 5.8% CAGR over the past five years and 5.3% over the past three years. While its four-year average dividend yield is 3.8%, its current dividend translates to a 4.02% yield.
PFE’s revenue increased 44.6% year-over-year to $14.60 billion for the quarter ended March 31, 2021. The company’s net income came in at $4.90 billion, which represents a 45.4% increase from the same period last year. Its adjusted EPS was $0.93, up 47.6% from the year-ago value.
Analysts expect PFE’s EPS and revenue to increase 43.1% and 63%, respectively, year-over-year to $1.03 and $19.77 billion for the quarter ending September 30, 2021. It surpassed consensus EPS estimates in three of the trailing four quarters.
Last month, Myovant Sciences Ltd. (MYOV) and PFE announced that the U.S. FDA had approved MYFEMBREE, the first once-daily treatment for the management of heavy menstrual bleeding associated with uterine fibroids in premenopausal women. This is expected to boost the company’s revenues. The stock has gained 15.8% over the past three months to close yesterday’s trading session at $38.79.
PFE’s bright prospects are also apparent in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Value, Quality, Stability and Growth. Click here to see the additional POWR ratings for PFE (Momentum and Sentiment). PFE is ranked #5 of 230 stocks in the Medical-Pharmaceuticals industry.
AbbVie Inc. (ABBV)
Research-based biopharmaceutical company ABBV develops and sells pharmaceutical products worldwide. Its products are focused on treating conditions such as chronic autoimmune diseases in rheumatology, gastroenterology, and dermatology.
ABBV’s dividend pay-outs have grown at an 18.1% CAGR over the past five years and 19.1% over the past three years. While its four-year average dividend yield is 4.4%, its current dividend translates to a 4.67% yield. It paid a $1.30 quarterly dividend on May 14, 2021.
The company’s revenue increased 50.9% year-over-year to $13.01 billion for the first quarter, ended March 31, 2021. ABBV’s net income was $3.55 billion, which represents an 18% year-over-year increase. Its adjusted EPS came in at $2.95, up 21.9% from the same period last year.
ABBV’s EPS is expected to increase 31.6% year-over-year to $3.08 for the current quarter, ending June 30, 2021. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect its revenue to increase 34.9% year-over-year to $13.60 billion in the current quarter.
This month, ABBV announced positive top-line results from the Phase 3 maintenance study of FORTIFY, showing that risankizumab 360 mg achieved the co-primary endpoints of endoscopic response and clinical remission at one year in adult patients with moderate to severe Crohn's disease. This result could be a gamechanger for ABBV if the drug’s usage is approved. The stock has gained 18.6% over the past nine months to close yesterday’s trading session at $111.40.
ABBV’s POWR Ratings are consistent with this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. It has a B grade for Growth, Value and Quality. Click here to see ABBV’s ratings for Stability, Sentiment and Momentum as well. ABBV is ranked #10 in the same industry.
Eli Lilly and Company (LLY)
LLY is a drug manufacturing company that is engaged in the discovery, development, manufacturing, and marketing of products in the human pharmaceutical product segment. Its products include Diabetes and other endocrinology products, such as Baqsimi, Basaglar, Forteo, and Humalog.
The company declared an $0.85 quarterly dividend per share payable on June 10. LLY’s dividend pay-outs have grown at a 9.5% CAGR over the past five years and 13.7% over the past three years. While its four-year average dividend yield is 2.2%, its current dividend translates to a 1.71% yield.
LLY’s revenue increased 16.1% year-over-year to $6.81 billion for the first quarter, ended March 31. The company’s non-GAAP net income came in at $1.70 billion, which represents a 15.7% year-over-year rise. Its EPS was $1.87, up 16.1% from its year-ago value.
For the quarter ending September 30, 2021, analysts expect LLY’s EPS and revenue to increase 22.7% and 15.3%, respectively, to $1.89 and $6.62 billion. It surpassed consensus EPS estimates in three of the trailing four quarters.
The company announced on May 22 that in a pre-specified analysis of the Phase 2 SERENITY study, its product mirikizumab improved fatigue in patients with moderately to severely active Crohn's disease (CD). The stock has soared 29.4% over the past year to close yesterday’s trading session at $199.13.
LLY has a B overall rating, which translates to Buy in our proprietary rating system. It has a B grade for Quality, Value and Stability. In addition to the POWR Ratings grades we’ve just highlighted, we’ve also rated it for Growth, Sentiment and Momentum. Click here to see all LLY ratings. LLY is ranked #12 in the same industry.
Click here to checkout our Healthcare Sector Report for 2021
PFE shares were trading at $38.83 per share on Thursday afternoon, up $0.04 (+0.10%). Year-to-date, PFE has gained 7.69%, versus a 12.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Ananyo Guha Niyogi
Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand.
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