Dividends and a dividend prescription for yield-seeking investors

One of the groups which are consistent dividend payers is drug companies or Big Pharma. After they bring out a drug, it costs drop dramatically for each pill sold within the patent period. While Big Pharma is far from perfect for all drugs have side affects, but many do more good than harm and given an aging population more will be consumed. All bodies as they age begin to break down or slowly heal from aches and pains. The good news is some of the drugs help us all live longer.

Scott Clayton of TSI Network recently examined Big Pharma to find alternatives, his criteria was:

US listed pharmaceutical stock

the company has a rating system in such if a company achieves 10 to 12 points, they are deemed to be the most secure dividends or they are very sustainable

1 point from every 5 years of continuous dividend payments and 2 points for more than 5 years (this will be why many funds have some Big Pharma in them)

2 points if the company has raised the payment in the past 5 years

1 point for management’s commitment to dividends

1 point for operating in non-cyclical industries

1 point for limited exposure to foreign currency rates

2 points for a strong balance sheet, including manageable debt and adequate cash

2 points for a long term record of positive earnings and cash flow sufficient to cover dividend payments

1 point if a company is a leader in the industry

Company                   Points           Div Yield %    Mkt Cap  $B       1 Year Total Return

Pfizer                               10                3.1                   261.5                    23.1

Merck                              10                 2.7                   192.0                   13.6

Johnson & Johnson       10                 2.6                  366.4                    -0.9

Eli Lily                             10                  2.0                 119.2                     32.0

GlaxoSmithKline             9                  4.9                    98.7                     -2.7

AbbVie                              9                  4.2                   139.2                      0.3

Novartis                           9                   3.4                   198.7                     -1.2

Bristol Myers Squibb     9                  2.8                     94.5                     -8.2

Amgen                               9                  2.6                  131.0                       8.9

 

Linking to dividend paying stocks, all the above pay dividends and are very sustainable. If you buy any of them, there is no wrong answer. The beauty of the markets is some of the best have done better than their piers. The ideal of investing is to find great companies and over time they continue to do well. Whether you like Big Pharma or not, the stocks are worth looking at.

There are more questions than answers, till the next time – to raising questions.

 

 

 

 

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