Dividend yield: 5.3%
Berkshire Hathaway (BRK.A)(BRK.B) owns about 1.5 million shares of London-based GSK. The company is focused currently on overcoming several headwinds: generitzation of products such as Valtrex, the loss of Avandia, and the absence of pandemic flu products of last year. However, they expect headwinds to drop over the rest of the year and see a return to reported sales growth in 2012.
The company made several positive moves for shareholders in the quarter in spite of weaker sales, lower earnings per share and lower operating profit. They increased their dividend by a further 7% to 16 pence a share, and also bought back 1 billion pounds of stock already in 2011 and plans to do another $1 billion in share repurchases over the rest of the year. In each of the last seven years of operation GSK has raised its dividend.
Glaxosmithkline has a market cap of $105.82 billion; its shares were traded at around $41 with a P/E ratio of 11.4 and P/S ratio of 2.3. The company had annual average earnings growth of 3.2% over the past 10 years.
Eli Lilly & Co. (LLY)
Dividend yield: 5.2%
A close second is Indianapolis-based Eli Lilly, the 10th largest pharmaceutical company in the world. Eli Lilly still realized second-quarter 9% revenue growth year over year despite the negative impact of a generic version of its Gemzar entering the market. Sales of Gemzar decreased 62% year over year. Sales of nine of its other key drugs increased. The company launched three new drugs already this year and has 70 more in its pipeline.
Eli Lilly raised its dividend each year from 2003 to 2009, though it remained flat at $1.96 in 2010. The company expects revenue growth in the mid-single digits and a gross margin decline between 2 and 3 percentage points. It also expects that cash flows will be enough to fund its higher capital expenditures, anticipated business development activity and their dividend. There were no share repurchases in the first six months, and the company has no plans to do any for the rest of the year, although they have purchased $2.58 billion of their current $3 billion share repurchase program.
Eli Lilly & Co. has a market cap of $43.03 billion; its shares were traded at around $37.17 with a P/E ratio of 7.8 and P/S ratio of 1.8. The company had annual average earnings growth of 1.3% over the past 10 years.
BristolMyers Squibb Co. (BMY)
Dividend yield: 4.5
BristolMyers Squibb’s top product sells more than its second and third top sellers combined. Plavix, earned $6.7 billion in 2010, Abilify earned $2.6 billion, and Reyataz $1.5.
The company’s sales in the second quarter of 2011 rose 14% to $5.4 billion year over year, helped by a strong initial performance ($95 million) of new metastatic melanoma drug Yervoy, which received approval in March. It also received regulatory approval for Nulogix in the U.S. and Europe, and had positive top-line results from its Phase III trial of Eliquis for stroke prevention in patients with atrial fibrillation. EPS guidance for 2011 was raised to $2.08 to $2.18.
Bristolmyers Squibb Co. has a market cap of $50.54 billion; its shares were traded at around $29.63 with a P/E ratio of 13.5 and P/S ratio of 2.6. The company had annual average earnings growth of 15% over the past 5 years.
Dividend yield: 4.4%
Pfizer is the world’s second-largest pharmaceutical company, with 31 key pharmaceutical products for humans and 15 for animal health. In the second Pfizer received FDA approval for Sutent, an advanced pancreatic tumor drug, and Oxecta, for the management of acute to chronic moderate-to-severe pain.
Their second-quarter 2011 revenue fell 1% from the same quarter in 2010, after a favorable 4% impact from foreign exchange and 2% to the addition of legacy products from King, a company it just acquired. That was offset by a 9% impact from the loss of exclusivity for several products and 1% from U.S. healthcare reform. Revenue from emerging markets, however, was up 7%. For 2011 the company reaffirms its guidance of $65.2 to $67.2 billion in revenue.
In the first half of 2011, Pfizer repurchased $4.3 billion of its shares, and anticipates repurchasing a total of between $5 billion to $7 billion of its stock for the year.
Pfizer Inc. has a market cap of $143.64 billion; its shares were traded at around $18.41 with a P/E ratio of 8.3 and P/S ratio of 2.1. The company had annual average earnings growth of 1.2% over the past 10 years.
Sanofi-Aventis ADS (SNY)
Paris-based Sanofi is the world’s fourth largest pharmaceutical company by prescription sales and the world’s largest producer of vaccines. It produces 15 prescription drugs as well as a broad range of over-the-counter products such as IcyHot, Gold Bond and Selsun Blue. Berkshire Hathaway owns 4,063,675 shares of this stock.
In the second quarter of 2011, sales grew 6.9%, thanks to their new (April 2011) acquisition Genzyme, without which sales would have decreased 4%. One of Sanofi’s drugs, Plavix, is the third best-selling drug in the world. Plavix sales were up 11.1% worldwide in the second quarter. In Europe, where it faces generic competition, sales were down 29.8%. Plavix loses its patent in November of this year.
The company has set the objective to deliver average sales growth of at least 5% per year over 2012-2015, and improve the business operating margin over the same span of time through leveraging growth platforms, synergies from subsidiaries Genzyme and Merial, and anew cost savings program.
Sanofi also has committed to progressively increase its dividend payout by 50% by 2014, compared to 35% for 2010.
Sanofi-Aventis Ads has a market cap of $86.16 billion; its shares were traded at around $32.86 with a P/E ratio of 8.2 and P/S ratio of 2. The company had annual average earnings growth of 8.8% over the past 5 years.
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