Promising Long-term Investments in Pharmaceutical Stocks
Pharmaceutical stocks are often considered strong long-term investments due to their ability to perform well in varying market conditions. The continuous necessity for medications ensures a reliable stream of revenue and growth for companies in this sector.
A reliable pharmaceutical stock is characterized by a solid portfolio and a strong pipeline, demonstrating its capacity for consistent earnings growth. These companies are also known to innovate, which potentially extends their market strength.
Additionally, many pharmaceutical companies are noted for paying dividends, providing a steady annual income to investors. Here are three leading pharmaceutical stocks identified as worthwhile investments for those with $500 to allocate.
1. Abbott Laboratories
Abbott Laboratories, symbolized by (ABT), operates not only in pharmaceuticals but also in medical devices, diagnostics, and nutrition. This diversification proves advantageous, as declines in one area can be offset by successes in others. For instance, despite declining coronavirus testing sales affecting its diagnostics business, Abbott saw significant growth in its medical devices segment.
Abbott’s consistent approval of new products drives its growth and investor returns. A report from Hendrik Bessembinder at Arizona State University highlighted Abbott as one of the most profitable healthcare stocks, delivering a cumulative compound return of over 7.8 million percent since 1937.
Abbott prioritizes rewarding shareholders, underscored by its status as a Dividend King, having increased its dividend for over 50 consecutive years. Additionally, Abbott has initiated a new $7 billion stock repurchase program, reflecting its confidence in future performance.
2. Pfizer
Pfizer, identified by (PFE), has experienced a decline in stock value, decreasing nearly 30% over the past three years. The stock presents a favorable entry point, trading at a low valuation of 11 times forward earnings estimates.
Despite challenges such as decreased sales from its coronavirus vaccine and treatment, Pfizer’s investment in oncology and new products aim to bolster future growth. The company projects that these initiatives will contribute $20 billion to its 2030 revenue.
The acquisition of Seagen, an oncology specialist, has already positively impacted revenue, with plans to launch at least eight blockbuster oncology medications by 2030. Although not a Dividend King, Pfizer offers a high dividend yield of 5.6% and pledges ongoing dividend growth.
3. Johnson & Johnson
Johnson & Johnson (JNJ) recently spun off its consumer health division into a separate entity, Kenvue, to concentrate on pharmaceuticals and medtech, a move yielding positive results. The company reported notable growth in its innovative-medicines segment and medtech divisions in the latest quarter.
Impressively, Johnson & Johnson’s product Darzalex achieved $3 billion in sales within a single quarter, and new approvals in its pharmaceuticals lineup are set to boost future growth. In medtech, strategic acquisitions have positioned the company as a leader in major cardiovascular-intervention markets.
Supported by its strong financial standing, which includes $19 billion in free cash flow, Johnson & Johnson is expected to maintain its Dividend King status. The company is considered an excellent option for those seeking passive income and long-term earnings growth.
