These pharmaceutical companies offer attractive yields and have been increasing their dividends consistently.
With the current labor-market trends and potential interest-rate adjustments, Wall Street is navigating a complex landscape. During such times, investing in reliable, dividend-paying stocks can be advantageous, and the healthcare sector is particularly promising due to its stability.
Pharmaceuticals tend to perform well even during economic downturns, allowing these companies to generate steady revenue, earnings, and cash flow to support their dividend commitments over extended periods.
In this context, let’s explore two outstanding healthcare dividend stocks that are worth holding: Amgen (AMGN -2.19%) and Merck (MRK -2.58%).
1. Amgen
As a leading biotech firm, Amgen offers a compelling investment opportunity with a diverse range of products, including over two dozen blockbuster drugs that yield over $1 billion in annual sales each.
Amgen’s product lineup spans various therapeutic areas, featuring medications like Repatha, which reduces heart attack risk; Evenity and Prolia, aimed at improving bone health; and Otezla, a treatment for plaque psoriasis. Consistent revenues are bolstered by a strong second-quarter performance, where revenues grew by 9% year-over-year to $9.2 billion, with adjusted earnings per share rising 21% to $6.02.
While Amgen will face patent expiry challenges, particularly with Prolia’s biosimilar competition, it is well-equipped to manage these hurdles through several existing growth drivers and new upcoming products. Notably, Tezspire and Tepezza are already showing promising sales growth.
2. Merck
Merck encounters increasing competition for its top-selling cancer drug, Keytruda, especially as patent protection wanes in 2028. Additionally, the company has experienced setbacks with its Gardasil vaccine sales in China due to reduced demand.
Consequently, Merck’s revenue has been declining, with second-quarter sales dropping 2% year-over-year to $15.8 billion. However, the company may have pathways to overcome these challenges, including developing a subcutaneous version of Keytruda, which would expand its market reach.
Merck also has promising new products in its pipeline and expects to see sales growth from Gardasil and Gardasil 9 in the latter part of the year. The company’s dividend yield is currently at a strong 3.9%, having increased payouts by 88.8% over the last decade, making it an appealing option for dividend investors looking for long-term holds.
