In this article, we discuss 10 best pharma dividend stocks to buy.
As per a Bloomberg report dated September 12, the global bio-pharma market was valued at $274.10 billion in 2020 and is forecasted to reach $703.28 billion by 2027 with a CAGR of 12.5% over the forecast period. The factors which will contribute to the growth of the pharma sector include the heightening prevalence of chronic diseases, increasing investment in research and development, and the growing pharmaceutical innovations. The global bio-pharma market will witness continuous growth on the back of higher need for vaccines with new diseases being discovered all over the world.
The outlook for the pharma industry remains positive for 2023. The industry will potentially exceed $1 trillion by next year, given that multiple last-stage clinical trials are set to be approved and hundreds of new products will be patented in 2023 and beyond. Some key trends which will shape the pharmaceutical industry in 2023 include the use of artificial intelligence, the acceptance of cannabidiol (CBD) for medical purposes, precision medicine, the use of blockchain technology in the pharmaceutical industry, smaller manufacturing facilities, digitization, state-mandated discounts and rebates, and an increased focus on research and development. Nearly 38% of market experts anticipate big data to have the highest impact on the pharmaceutical industry.
Investors who want to benefit from the growing pharma industry, and are seeking dividend-paying firms for their portfolios, can monitor stocks like Amgen Inc. (NASDAQ:AMGN), Bristol-Myers Squibb Company (NYSE:BMY), and Merck & Co., Inc. (NYSE:MRK).
Our Methodology
We selected the following pharma dividend stocks based on positive analyst coverage, strong business fundamentals, and solidity of dividend profiles. The dividend yields as of October 27 have been mentioned. We have assessed the hedge fund sentiment from Insider Monkey’s database of 895 elite hedge funds tracked as of the end of the second quarter of 2022.
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Best Pharma Dividend Stocks To Buy
10. GSK plc (NYSE:GSK)
Number of Hedge Fund Holders: 34
Dividend Yield as of October 27: 5.59%
GSK plc (NYSE:GSK) was founded in 1715 and is headquartered in Brentford, the United Kingdom. The company engages in the development, manufacture, and marketing of pharmaceutical products, vaccines, over-the-counter medicines, and health-related consumer products. It operates through four segments – Pharmaceuticals, Pharmaceuticals R&D, Vaccines, and Consumer Healthcare. The company’s dividend yield on October 27 came in at 5.59%.
On October 20, GSK plc (NYSE:GSK) reported that its vaccine Shingrix was able to offer at least a decade of protection against shingles after initial vaccination in adults aged 50 years and over. Vaccine efficacy was 97% in individuals 50 years and older and 91% in adults 70 years and above over a follow-up period of roughly four years.
Morgan Stanley analyst Mark Purcell on October 12 raised the price target on GSK plc (NYSE:GSK) to 1,650 GBp from 1,550 GBp and maintained an Equal Weight rating on the shares.
According to Insider Monkey’s second quarter database, 34 hedge funds were long GSK plc (NYSE:GSK), compared to 33 funds in the prior quarter. Ken Fisher’s Fisher Asset Management featured as the biggest stakeholder of the company, with 19.6 million shares worth $851.80 million.
In addition to Amgen Inc. (NASDAQ:AMGN), Bristol-Myers Squibb Company (NYSE:BMY), and Merck & Co., Inc. (NYSE:MRK), GSK plc (NYSE:GSK) is one of the best pharma dividend stocks to invest in.
9. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Number of Hedge Fund Holders: 40
Dividend Yield as of October 27: 5.34%
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is based in Deerfield, Illinois, operating as an integrated healthcare, pharmacy, and retailer in the United States, the United Kingdom, Germany, and internationally. The company has three segments – U.S. Retail Pharmacy, International, and U.S. Healthcare. Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is one of the best dividend stocks to invest in.
On October 13, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) posted a FQ4 non-GAAP EPS of $0.80 and a revenue of $32.45 billion, outperforming estimates by $0.03 and $280 million, respectively. For FY2023, the firm expects adjusted EPS of $4.45 to $4.65 as resilient core business growth is more than offset by slowing 2022 COVID-19 execution and currency headwinds, versus the market consensus of $4.49.
Deutsche Bank analyst George Hill raised the price target on Walgreens Boots Alliance, Inc. (NASDAQ:WBA) to $41 from $38 and maintained a Hold rating on the shares on October 25. The analyst’s primary takeaway from the latest earnings call is that the speed of decline in the pharmacy sector may have troughed and that Walgreens Boots Alliance, Inc. (NASDAQ:WBA) may be in a position to gain market share.
According to the second quarter database of Insider Monkey, 40 hedge funds were bullish on Walgreens Boots Alliance, Inc. (NASDAQ:WBA), compared to 38 funds in the preceding quarter. Stephen Dubois’ Camber Capital Management is a significant position holder in the company, with 2.82 million shares worth $107 million.
Here is what Aristotle Capital Management Global Equity has to say about Walgreens Boots Alliance, Inc. (NASDAQ:WBA) in its Q1 2022 investor letter:
“We first invested in Walgreens Boots Alliance in early 2013. Over our holding period, Walgreens merged with U.K.-based Boots Alliance, establishing itself as a global leading retail pharmacy chain. CEO Stefano Pessina set the company on a path of pursuing strategic partnerships (as opposed to vertical integration deals) to increase store traffic and to, over time, transform the business into a neighborhood health destination around a more modern pharmacy. Using its strong FREE cash flow generation, the company ramped up its investments in technology, aiming to accelerate the digitalization of health information. Mr. Pessina was not successful, however, at turning around the firm’s U.S. retail segment and had to deal with increasing prescription drug reimbursement pressures. He stepped down as CEO in 2020, and in 2021, Roz Brewer took the reins of the firm. We admire Ms. Brewer’s impressive track record at companies that include Starbucks (NASDAQ:SBUX) and Walmart (Sam’s Club). However, given management’s decision to divest core cash-generative businesses and redeploy capital to embryonic healthcare startups, we prefer to step aside while we follow the company’s progress.”
8. Cardinal Health, Inc. (NYSE:CAH)
Number of Hedge Fund Holders: 44
Dividend Yield as of October 27: 2.62%
Cardinal Health, Inc. (NYSE:CAH) operates as an integrated healthcare services and products company in the United States, Canada, Europe, Asia, and internationally. The company operates in two segments, Pharmaceutical and Medical. The Pharmaceutical segment distributes branded and generic pharmaceutical, specialty drugs, and over-the-counter healthcare and consumer products. On September 15, PayrHealth announced a collaboration with Cardinal Health, Inc. (NYSE:CAH) to help the latter simplify payor contracting and optimize financial performance. It is one of the best dividend stocks to consider.
On August 29, UBS analyst Kevin Caliendo raised the price target on Cardinal Health, Inc. (NYSE:CAH) to $78 from $61 and maintained a Buy rating on the shares. The company’s Pharma segment and the potential for significant capital deployment will support the stock, the analyst told investors. He further cited Cardinal Health, Inc. (NYSE:CAH)’s “cleaner” balance sheet and estimated a forward free cash flow yield of about 10% before dividends.
According to Insider Monkey’s data, 44 hedge funds were long Cardinal Health, Inc. (NYSE:CAH) at the end of June 2022, compared to 38 funds in the prior quarter. Richard S. Pzena’s Pzena Investment Management is the leading position holder in the company, with 2.9 million shares worth $151.35 million.
7. AstraZeneca PLC (NASDAQ:AZN)
Number of Hedge Fund Holders: 47
Dividend Yield as of October 27: 3.29%
AstraZeneca PLC (NASDAQ:AZN) is headquartered in Cambridge, the United Kingdom, and the company is focused on the discovery, manufacture, and commercialization of prescription medicines. AstraZeneca PLC (NASDAQ:AZN) is one of the best dividend stocks to invest in, with the stock yielding 3.29% as of October 27. Invitae Corporation (NYSE:NVTA) announced a partnership with AstraZeneca PLC (NASDAQ:AZN) on October 27, where the latter can use Invitae’s Citizen natural history data in a retrospective and prospective study of patients diagnosed with cholangiocarcinoma, a rare bile duct cancer.
On October 19, Berenberg analyst Luisa Hector maintained a Buy rating on AstraZeneca PLC (NASDAQ:AZN) but lowered the price target on the shares to 118 GBp from 120 GBp.
Among the hedge funds tracked by Insider Monkey, 47 funds reported owning stakes worth $4.9 billion in AstraZeneca PLC (NASDAQ:AZN) at the end of June 2022, compared to 45 funds in the earlier quarter worth $4.5 billion. Ken Fisher’s Fisher Asset Management held the leading position in the company, comprising 21.3 million shares worth $1.4 billion.
Here is what Baron Funds specifically said about AstraZeneca PLC (NASDAQ:AZN) in its Q3 2022 investor letter:
“AstraZeneca PLC (NASDAQ:AZN) is a global pharmaceutical company focused on oncology, respiratory, cardiovascular, and metabolism drugs. Despite incremental positive news flow, shares were hurt by the broader flight out of European stocks and the decline in the British Pound that started late in the quarter. We retain conviction in AstraZeneca given its best-in-class growth profile combined with its strong pipeline and commercial launch characteristics. We highlight breast cancer drugs Enhertu and Dato-DXd as two promising near-term opportunities.”
6. Amgen Inc. (NASDAQ:AMGN)
Number of Hedge Fund Holders: 55
Dividend Yield as of October 27: 2.90%
Amgen Inc. (NASDAQ:AMGN) is a California-based manufacturer of human therapeutics, focused on therapeutic areas such as inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology, and neuroscience. On October 18, ChemoCentryx shareholders largely approved Amgen Inc. (NASDAQ:AMGN)’s $3.7 billion acquisition of the company. The acquisition will strengthen Amgen’s product pipeline further.
On October 11, Morgan Stanley analyst Matthew Harrison upgraded Amgen Inc. (NASDAQ:AMGN) to Overweight from Equal Weight with a price target of $279, up from $257. The analyst sees “underappreciated upside” in the company’s mid-term pipeline. Amgen Inc. (NASDAQ:AMGN) has defensive positioning in the present macro backdrop, with “attractive” short-term options of AMG133 for obesity and the biosimilar Amjevita launch, the analyst told investors in a research note.
According to Insider Monkey’s data, 55 hedge funds were bullish on Amgen Inc. (NASDAQ:AMGN) at the end of the second quarter of 2022, compared to 56 funds in the last quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the largest position holder in the company, with 1.66 million shares worth $404.3 million.
Like AbbVie Inc. (NYSE:ABBV), Bristol-Myers Squibb Company (NYSE:BMY), and Merck & Co., Inc. (NYSE:MRK), Amgen Inc. (NASDAQ:AMGN) is one of the best dividend stocks to consider.
Here is what Aristotle Capital specifically said about Amgen Inc. (NASDAQ:AMGN) in its Q2 2022 investor letter:
“Amgen Inc. (NASDAQ:AMGN), the pharmaceutical company focused on biotechnology-based therapeutics, was also a top contributor for the quarter. The company reported solid results, with a variety of products, such as bone-strengthening drugs Prolia and EVENITY, contributing to overall revenue growth. Amgen continued to increase the market share for cholesterol drug Repatha (a catalyst we had originally identified), delivering record quarterly sales as the drug’s usage expands with high-risk patients who have not yet had a cardiovascular event, and as barriers for prescribers, healthcare systems and patients are removed. In addition, we believe the company is poised to gain market share with its biosimilars (akin to generic versions of biologic drugs), also a previously identified catalyst. Biosimilars accounted for over $2 billion in revenue in 2021, and we believe this has the potential to more than double by the end of the decade, accelerated by six additional biosimilars (for a total of 11 products on the market). This includes the upcoming launch in the U.S. of arthritis treatment Amjetiva in January 2023. Meanwhile, the company is advancing its robust pipeline of early- and late-stage assets, with several phase III results due this year. These developments have caused us to remain enthusiastic about Amgen’s ability to build on its decades of success developing novel treatments using biopharmaceuticals.”
5. Zoetis Inc. (NYSE:ZTS)
Number of Hedge Fund Holders: 62
Dividend Yield as of October 27: 0.85%
Zoetis Inc. (NYSE:ZTS) is a New Jersey-based company that develops, manufactures, and commercializes animal health medicines, vaccines, and diagnostic products in the United States and internationally. On October 13, Zoetis Inc. (NYSE:ZTS) declared a $0.325 per share quarterly dividend, in line with previous. The dividend is payable on December 1, to shareholders of the company as of November 1. Zoetis Inc. (NYSE:ZTS) is one of the best dividend stocks to monitor.
On October 17, JPMorgan analyst Chris Schott maintained an Overweight rating on Zoetis Inc. (NYSE:ZTS) but trimmed the price target on the shares to $225 from $250. The analyst noted that vet visit pressures remain but appear largely well reflected in the valuations of animal health names.
According to Insider Monkey’s data, 62 hedge funds were long Zoetis Inc. (NYSE:ZTS) at the end of Q2 2022, compared to 67 funds in the prior quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the leading position holder in the company, with more than 2 billion shares worth $358.6 million.
Here is what Baron Health Care Fund has to say about Zoetis Inc. (NYSE:ZTS) in its Q1 2022 investor letter:
“Shares of Zoetis Inc., the global leader in the discovery, development, and manufacturing of companion and farm animal health medicine and vaccines, fell along with shares of other high-multiple 2021 standout performers. We retain conviction as Zoetis recently reported a top and bottom line beat with more than 21% growth driven by dermatology, parasiticides, and recently launched monoclonal osteoarthritic treatments. The company’s 2022 guidance was in line with Street expectations, calling for 9% to 11% operational revenue growth and modest margin expansion despite heavy investment in core growth drivers.”
4. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 65
Dividend Yield as of October 27: 2.36%
CVS Health Corporation (NYSE:CVS) provides health services in the United States, operating through Health Care Benefits, Pharmacy Services, and Retail/LTC segments. On September 22, CVS Health Corporation (NYSE:CVS) declared a quarterly dividend of $0.55 per share, in line with previous. The dividend is payable on November 1, to shareholders of record on October 21. CVS Health Corporation (NYSE:CVS)’s dividend yield on October 27 came in at 2.36%.
On October 20, BofA analyst Michael Cherny reiterated a Buy recommendation on CVS Health Corporation (NYSE:CVS) but slashed the price target on the stock to $118 from $122. The analyst expects Q3 results to be generally steady with well-understood short-term tailwinds and headwinds.
According to Insider Monkey’s Q2 data, 65 hedge funds were long CVS Health Corporation (NYSE:CVS), compared to 72 funds in the prior quarter. Cliff Asness’ AQR Capital Management is the largest stakeholder of the company, with 3.3 million shares worth $312.70 million.
Here is what Vltava Fund has to say about CVS Health Corporation (NYSE:CVS) in its Q3 2022 investor letter:
“CVS is a leader in the provision of healthcare services in the USA. It has three main businesses: an enormous network of pharmacies, a health insurance company, and “prescription benefit management”, which is a kind of intermediary between insurance companies and pharmacies. This is the result of large acquisitions over the past 15 years – most notably of Caremark (2007) and Aetna (2018). The markets had deemed its acquisition of health insurer Aetna too expensive (and we agree), so CVS stock then fell into disfavour for a few years.
We took advantage of this in the summer of 2020 and brought the stock into our portfolio at a time when its price was pressed down further by the coronavirus pandemic. CVS is a giant. It has revenues of USD 300 billion, making it one of the largest companies in the world. It is a relatively stable and highly profitable company with strong free cash flow. Over the past few years, CVS has focused primarily on reducing debt.
This is already much lower than it had been after the Aetna acquisition, and most of the cash is now likely to go to shareholders through share buybacks or be used for smaller acquisitions to grow the company further. CVS trades at about 11 times annual earnings, which is a very appealing valuation given the expected future growth in profitability and overall modest cyclicality in its business.”
3. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 69
Dividend Yield as of October 27: 2.87%
Bristol-Myers Squibb Company (NYSE:BMY) is a New York-based company that manufactures and markets pharmaceutical products worldwide for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and COVID-19 diseases. On September 14, Bristol-Myers Squibb Company (NYSE:BMY) declared a quarterly dividend of $0.54 per share, in line with previous. The dividend is distributable on November 1. After posting market-beating Q3 2022 results, the company reaffirmed its FY 2022 total net sales of $46 billion versus a $46.03 billion consensus, and an adjusted EPS of $7.44-$7.74, compared to a $7.54 consensus. Bristol-Myers Squibb Company (NYSE:BMY) is one of the premier dividend stocks to invest in.
On October 12, Barclays analyst Carter Gould maintained an Equal Weight rating on Bristol-Myers Squibb Company (NYSE:BMY) but lowered the price target on the stock to $66 from $69, citing “another round of challenging setups” for biopharmaceuticals in Q3.
According to Insider Monkey’s Q2 data, 69 hedge funds were bullish on Bristol-Myers Squibb Company (NYSE:BMY), compared to 70 funds in the prior quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the biggest position holder in the company, with 4.7 million shares worth $363 million.
RGA Investment Advisors made the following comment about Bristol-Myers Squibb Company (NYSE:BMY) in its Q3 2022 investor letter:
“Bristol-Myers Squibb Company (NYSE:BMY), which we referenced above, boasts a double digit free cash flow yield that gets divided roughly equally between repurchases, a dividend and M&A in what is the best environment for acquisitions perhaps ever. In 2019, BMY acquired Celgene, who had one of the better corporate development programs in the industry. We view this as a great outlet for us as generalists considering a company like BMY should truly thrive with the ability to acquire outstanding assets and science at depressed valuations. We touched on the Turning Point acquisition above and we expect the company to be increasingly active in the M&A landscape. Importantly, Celgene also came to BMY with a phenomenal CAR-T platform. CAR-T is a cell therapy that activates the body’s immune system to target cancers. This will be a key growth vector alongside M&A in overcoming the company’s patent cliff.”
2. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 71
Dividend Yield as of October 27: 3.68%
AbbVie Inc. (NYSE:ABBV) manufactures and sells pharmaceuticals worldwide. On October 20, the company announced that it is acquiring the U.K.-based DJS Antibodies for $255 million in cash to expand its immunology pipeline. On September 9, AbbVie Inc. (NYSE:ABBV) declared a $1.41 per share quarterly dividend, which is payable to shareholders on November 15. The company delivered a dividend yield of 3.68% as of October 27.
Morgan Stanley analyst Terence Flynn on October 13 maintained an Overweight rating and a $185 price target on AbbVie Inc. (NYSE:ABBV) while naming the stock his “Catalyst Driven Idea”, noting that AbbVie Inc. (NYSE:ABBV)’s anti-TNF ADC Phase 2 data could provide a new pipeline opportunity.
Among the hedge funds tracked by Insider Monkey, AbbVie Inc. (NYSE:ABBV) was part of 71 hedge fund portfolios at the end of the second quarter of 2022, compared to 76 in the prior quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital held the leading stake in the company, comprising 4.2 million shares worth over $654 million.
Here is what Baron Funds specifically said about AbbVie Inc. (NYSE:ABBV) in its Q3 2022 investor letter:
“AbbVie Inc. (NYSE:ABBV) is a drug developer best known for Humira, an immunosuppressant that is the best selling drug of all time. Given outsized key product risk (patent cliff and generic launches beginning in 2023), AbbVie has broadened its pipeline, highlighted by its Allergan acquisition. Shares fell on results that missed consensus and indications that legacy franchises were outperforming newer product launches, calling into question AbbVie’s long-term strategy. With promising assets in the pipeline and its robust cash flow profile, we believe AbbVie will grow well into the future.”
1. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 79
Dividend Yield as of October 27: 2.75%
Merck & Co., Inc. (NYSE:MRK) is a New Jersey-based healthcare company that operates through Pharmaceutical and Animal Health segments. The Pharmaceutical segment offers human health pharmaceutical products and vaccines in the areas of oncology, hospital acute care, immunology, neuroscience, virology, cardiovascular, and diabetes. On October 27, Merck & Co., Inc. (NYSE:MRK) posted market-beating Q3 2022 results and raised the FY22 outlook. It is one of the best dividend stocks to monitor.
On October 12, Barclays analyst Carter Gould raised the firm’s price target on the shares to $105 from $101 and reiterated an Overweight rating on the shares.
Among the hedge funds tracked by Insider Monkey, Merck & Co., Inc. (NYSE:MRK) was part of 79 public stock portfolios, compared to 84 in the preceding quarter. Ken Fisher’s Fisher Asset Management featured as the leading stakeholder of the company, with 12.12 million shares valued at $1.10 billion.
Here is what Carillon Tower Advisers specifically said about Merck & Co., Inc. (NYSE:MRK) in its Q2 2022 investor letter:
“Merck & Co., Inc. (NYSE:MRK) reported a strong first quarter and raised its financial guidance for 2022. The company also continues to benefit from the recent rotation into pharmaceuticals, which historically has been a more defensive industry.”
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Disclosure: None. 10 Best Pharma Dividend Stocks To Buy is originally published on Insider Monkey.
