Investors are always trying to find the right balance between risk andreward. I believe the following three pharmaceutical stocks below offer a nice balance: They are expected to show some nice growth, while also paying a healthy dividend that exceeds most other investment options.
Is Pfizer Inc. (NYSE:PFE) right for you?
Dow component and pharmaceutical giant Pfizer Inc. (NYSE:PFE) is surely a juggernaut, with trailing-12-month revenue near $60 billion, and a market capitalization at approximately $200 billion. The stock has done well the past year up approximately 20% and sitting right near its $27.84 52-week high. This leads us to naturally ask is it still okay to buy Pfizer at these levels?
In one word: yes. The company has blown past consensus analysts’ estimates in three of the last four quarters. It still looks relatively cheap at a 14 times trailing and 11 times forward P/E. This past year, Pfizer Inc. (NYSE:PFE) generated more than $18 billion in free cash flow, which allowed the company to raise its tasty 3.5% dividend yield yet again this past quarter. I think with the continued aging of the baby boomers creating consistent demand for the foreseeable future, a very strong balance sheet, and consistently growing and sizeable dividend, Pfizer is still a buy.
Is Amgen, Inc. (NASDAQ:AMGN) a buy at these levels?
It is no secret that Amgen, Inc. (NASDAQ:AMGN) is a world-class firm with a number of lucrative products, which have led the company to $17 billion in annual revenue and a market capitalization near $70 billion. The stock has skyrocketed nearly 40% the past 12 months, though, leaving investors wondering whether it's still worth owning.
I believe it is, for a number of reasons. First, the company has operationally been fantastic, exceeding consensus estimates in each of the last four quarters. Second, analysts are expecting accelerating growth, from the 8% per annum it was growing the past five years to nearly 10% over the next five years. Third, the company trades at a historically cheap 16 times trailing and 11 times forward P/E. Lastly, the company pays a consistently growing 2.2% dividend yield. I think Amgen, Inc. (NASDAQ:AMGN) provides a great balance between growth and value , and is a solid buy for the long-term investor.