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5 Healthcare Stocks with Big Dividends

March 30, 2012 | About:
Many investors are extremely bullish on the health care industry. As the aging population increases the demand for medical services, procedures and pharmaceuticals, revenue and profits are sure to surge. Moreover, barriers to entry, patents and attractive dividend yields make healthcare companies an ideal investment for income investors.

Below I have composed a list of five strong dividend paying companies operating within the healthcare sector. Four of the companies are large pharmaceuticals, and the fifth is a small biotech company based in the Southwest United States:

Eli Lilly (LLY) shares are trading just above $39. Shares have traded between $33 and $42 within the last 52 weeks. The company pays an annual dividend of $1.96, which yields 5% of the share price. Eli Lilly has paid its investors a dividend since 1982. In total the company has paid out a dividend of $27 per share, of which $19 dollars has been paid out as of 2000. The company currently pays out 50% of its earnings as dividend.

During the last 12 months investors have benefited from a 32% return on equity. Eli Lilly is large cap company, which has a market cap of $44 billion. Shares are currently trading at a price to earnings ratio of 10, a price to sales ratio of 1.8 and a price to book multiple of 2.9.

Astrazeneca (AZN) shares are trading above $45, between its 52-week low and high of $41 and $53, respectively. The company pays an annual dividend of $3.90 a share, which yields 8.6%. The company has paid investors consecutive dividends since 1993. In total the company has paid out a dividend of $24 per share, of which $20 dollars has been paid out as of 2000. Although the company does pay a high dividend yield, the company currently only pays out 37% of earnings as dividends.

Investors have benefited from a 43% return of equity. Astrazeneca is a large cap company with a market cap of $60 billion. The company is relatively cheap, trading at a price to earnings ratio of 6.2, a price to sales multiple of 1.7 and a price to book ratio of 2.5.

GlaxoSmithKline (GSK) shares are trading below $45. The company has traded between $39 and $47 within the last 52 weeks. The company’s annual dividend of $2.65 yields 5.9% to current share price. Glaxo has made consecutive dividend payments since 1987. The company has paid out $32 in dividends since the first issue, and has paid out $22 per share since 2000. Glaxo has an eye-opening high payout ratio of 69%; investors should keep a keen eye on this ratio as further increases may jeopardize future dividend payments.

Glaxo is the global leader in pharmaceutical products; the company has a market cap of $222 billion. During the previous twelve months, investors have enjoyed a 59% return on equity. The company is trading relatively high at a price to earnings ratio of 27.5, a price to sales ratio of 5.1 and a price to book ratio of 17.5.

Bristol-Myers Squibb (BMY) shares are trading just above $33, between the 52-week low and high of $25 and $36, respectively. The company pays an annual dividend of $1.36 a share, which yields 4.1% to the current share price. The company has one of the longest and strongest dividend payment histories in the healthcare industry. Bristol-Myers has paid a dividend since 1977. The company has paid a total dividend of $27 a share since inception, $17 of which has been paid since 2000. Bristol-Myers also has a high payout ratio of 61%.

Bristol-Myers Squibb is a large company with a market cap of $54 billion. Over the last twelve months, shareholders have benefited from a 33% return on equity. The company is currently trading at a price to earnings multiple of 15.4, a price to sales ratio of 2.6 and a price to book ratio of 3.3.

PDL BioPharma (PDLI) shares are trading near $6.30. Within the last 52 weeks shares have traded as high as $6.70 and as low as $4.60. The company pays an annual dividend of $.60, which yields 9.5%. Though the company commenced trading in 1992, PDL only recently began paying dividends in 2009, however the company did make two previous special dividends in 2008. In total, the company has paid out $11 to shareholders as dividend since 2008. The company currently pays out 58% of earnings as dividends to shareholders.

PDL is a small company with a market cap, just shy of $880 million. Shares are trading a price to earnings multiple of 8.3 and price to sales ratio of 2.5.

About the author:

Dividend King
I am primarily an investor interested in creating passive income streams through dividends. I focus on finding and analyzing dividend paying stocks, MLPs and REITs that are a good fit for income investors.

I practice Judaism and my faith is very important to me. I visit family in Israel once a year, but I am educated and work in the United States where I hold an MBA and a bachelor’s in English. I am a patient man, enjoy wine but am not a connoisseur, and I listen more than I speak.

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