In the coronavirus-fueled bear market, finding a dividend stock that hasn’t taken a major hit is akin to looking for the holy grail. Companies have cut dividends left and right, leaving some investors to wonder if it’s even worth buying dividend-paying stocks right now. While there are valid arguments for the pros and cons of dividend investing in the COVID-19 market, there are still some solid dividend stocks for investors with a long-term buying philosophy at the market. ‘spirit.
No stock is 100% recession proof. With that said, by investing in high dividend stocks that hold their own firmly in the bear market, you can still enjoy strong dividend income in these uncertain times and the recovery period ahead. And by picking up more stocks of safe dividend-paying stocks, you can enjoy a significant return on your investment once the market recovers.
Specifically, Novartis (NYSE: NVS), AbbVie (NYSE: ABBV), and Amgen (NASDAQ: AMGN) have become attractive buying opportunities since the coronavirus market crash. Not only has every company consistently increased or maintained its dividend year after year, but each experienced relatively low volatility during this unprecedented time.
The case of Novartis
Novartis was not immune to the massive drop in stock prices in March; the stock was close to $ 100 in mid-February before dropping to around $ 70 on March 23. However, Novartis has had a fantastic rebound in recent weeks, so much so that it is currently around 12% below its level. upper price over the past year ($ 99.84) and about 28% above the 52-week share low at $ 69.18.
Novartis is a true giant in the pharmaceutical industry, and one of the reasons the company has continued to thrive despite the coronavirus market is its diverse portfolio of high growth assets. In 2019, the company achieved net sales of just under $ 48 billion, an increase of 9% from the previous year. Cash flow totaled about $ 13 billion, a 15% year-over-year increase. A significant portion of Novartis’ revenue came from the heart failure drug Entresto and the psoriasis drug Cosentyx.
Novartis also received five major drug approvals from the FDA in 2019 and ended the year with a total of 164 drug trials underway. One of the most notable approvals was for the use of the gene therapy drug Zolgensma to treat spinal muscular atrophy in young children; disease is one of the main causes of infant mortality. More recently, Novartis has received FDA clearance move forward with clinical trials of hydroxychloroquine as a potential treatment for coronaviruses. (That said, recent trials of hydroxychloroquine in hospitals in Virginia have shown an increased death rate in patients receiving the treatment.)
Novartis’ dividend yield is strong at 3.5%. The company has a fantastic track record of increasing its dividend year after year. Novartis has consistently approved annual dividend increases since 1996. This fact, together with Novartis’ strong income base and healthy cash flow, makes this stock a viable option for long-term growth investors.
AbbVie not only has an excellent dividend yield of 5.87%, but a strong valuation and a diverse product portfolio to help it weather the current storm. The company has increased its dividend 47 years in a row, without fail. In the years since AbbVie broke with Abbott Laboratories (NYSE: ABT) in 2013, the company’s dividend payout increased by 195%. Despite the fact that AbbVie shares plunged to just $ 2 above its 52-week low in March, the stock has rebounded and is about 18% below its 52-week high.
In 2019, AbbVie reported annual revenue of just over $ 33 billion, about 10% year-over-year growth, largely driven by its versatile drug Humira. Humira has been one of the best-selling drugs in the world for several years now and was responsible for approximately $ 15 billion of AbbVie’s total net sales in 2019.
In March, AbbVie released an update regarding its highly anticipated merger plan with Allergan (NYSE: AGN). AbbVie and Allergan have filed a Consent Order in Council agreement with the U.S. Federal Trade Commission for the $ 63 billion purchase. One of Allergan’s most notable products is Botox, but the company has other impressive offerings, ranging from eye care products to pain relievers, which will further diversify AbbVie’s portfolio. The deal with Allergan is expected to be finalized in May.
The case of Amgen
Amgen was one of the few notable large-cap stocks to enter in April with its price rising for the year. The company’s unique and diverse portfolio of more than 36 products, including leading cancer and immunostimulant drugs, has so far not been significantly affected by the coronavirus. The stock more than broke its 52-week low at $ 166.30 and hovered around $ 230 per share last week.
Amgen’s stock also skyrocketed earlier this month following the company’s announcement of a collaboration with Adaptive biotechnologies (NASDAQ: ADPT) to develop antibody therapy against the coronavirus. Work on the drug candidate should begin immediately.
Amgen entered the coronavirus bear market from a relative strength in fiscal 2020, amassing $ 6.2 billion in fourth-quarter sales and total annual revenues of $ 23.4 billion. dollars. It reported free cash flow of $ 8.5 billion in 2019. One of the company’s main revenue drivers in 2019 was the bone disorder drug Prolia, which brought in $ 752 million in the fourth quarter. only. Amgen’s acquisition of the billion dollar blockbuster Otezla from Bristol Myers Squibb (NYSE: BMY) also holds promise for the company’s growth in 2020 and beyond.
It’s also worth noting that Amgen was one of a handful of stocks that outperformed the market during the 2008 recession. It looks set to do it again. While the company has a fairly modest dividend yield of 2.77%, the prospect of slow but steady long-term gains from this growth stock is hard to pass up.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.Source link