Does Novartis AG (ADR) (NVS)’s Dividend Have Room to Soar?

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Future Growth
Up to this point, we’ve looked at Novartis AG (ADR) (NYSE:NVS)’ dividend in the past, and we’ve also seen how its stock is being perceived by the market today. However, the most important factor to consider when understanding a dividend’s future is where the company’s cash flow is heading. It’s hard to generate more cash without growing sales, so let’s take a look at what industry analysts are expecting for Novartis’ revenue growth relative to peers this year.

Foolish bottom line
As you can see from the chart above, the loss of patent protection for hypertension drug Diovan is weighing on Novartis’ revenue growth in the near term. In terms of valuation, the stock is a little on the pricey side for its relatively low growth profile, but arguably deserves a premium for a more diversified, defensible business model (branded and generic drugs, vaccines, consumer products) than its pure-play branded pharmaceutical peers.

Novartis AG (ADR) (NYSE:NVS) deserves a serious look for income investors searching for a defensive dividend stock. And while this dividend might not be able to soar, long term investors can expect this payout to expand at a steady pace once the company’s cash flow starts growing again.

The article Does Novartis’ Dividend Have Room to Soar? originally appeared on

Brenton Flynn has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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