Investing in biotech stocks is relatively risky amid the volatility of the market. There are many factors that can greatly affect share trends and price performance. Biotech companies go through a series of clinical trials toward FDA approval and market launch. Any update of the trial can potentially cause the shares to shoot up or go down. Competitors’ activities and drug issues can affect the shares, as well.
The triumphs and falls of the competitors are sometimes used by traders as a benchmark for trends and outlook. Adverse events impacting one drug will shake the shares of many pharmaceutical companies. It will not only pull down the shares of the company carrying the drug but also those of its peers. This further contributes to the volatility of biotech stocks.
Despite the high risk of investing in biotechs, you can minimize the risk by adding filters. One of them is choosing only large cap companies that are more stable. Aside from that, going for high-yielding dividend stocks can further improve your earnings or minimize your loss. Therefore, a good investing strategy would be to choose large cap biotech stocks with high yields. Here are some stocks that fit the bill.
AstraZeneca plc (ADR) (NYSE:AZN)
Currently yields 7.27% and plans to buy Omthera Pharmaceutical.
AstraZeneca plc (ADR) (NYSE:AZN) is one of the highest yielding biotech stocks. Its forward annualized dividend is $3.80 per share based on the latest semi-annual dividend of $1.9 per share. The annualized dividend has also been increasing year-over-year for the last five years.
AstraZeneca plc (ADR) (NYSE:AZN) plans to acquire Omthera Pharmaceutical for an estimated $443 million. This will be done via an Omthera stock purchase at a premium price of 88% of its May 24, 2013 closing price.
Omthera has several drug candidates in Phase III trials. In 2012, the company reported positive results for ESPIRIT and EVOLVE. These drugs are expected to get approval within the year. If the acquisition plan pushes through, this will further strengthen the portfolio of AstraZeneca plc (ADR) (NYSE:AZN).
Novartis AG (ADR) (NYSE:NVS)
Another good dividend stock, Novartis AG (ADR) (NYSE:NVS)'s annualized dividend is $2.53 per share, or 3.48%. Unlike many stocks that pay quarterly dividends, Novartis pays dividends once per year. The dividend amount has also been increasing every year since 2001.
Novartis AG (ADR) (NYSE:NVS) is a well-diversified firm with numerous subsidiaries. One of them is a global leader in eye care, Alcon. In April, Alcon announced FDA approval of Simbrinza Suspension, a medicine for the treatment of elevated intraocular pressure (IOP).
Novartis AG (ADR) (NYSE:NVS) further reported positive results for its breakthrough therapy for patients with ALK+ non-small cell lung cancer called LDK378. These developments will arguably boost investor confidence in the company.
GlaxoSmithKline plc (ADR) (NYSE:GSK)
Also a mega-cap biotech stock with attractive dividend yield, GlaxoSmithKline pays a forward annualized dividend is $2.2 per share, or 4.23%. Yearly dividend growth has beeen seen since 2009.
GlaxoSmithKline announced on June 1, 2013 that the Phase III clinical results for VOTRIENT (pazopanib) met the primary objective. This drug candidate was designed as a maintenance therapy in women with advanced epithelial ovarian cancer.