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3 Biotech Stocks With Decent Dividend for a Steady Return
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The Zacks Biomedical and Genetics industry continues to grapple with issues like unfavorable foreign currency fluctuations that affect premium growth. Also, volatile global equity markets and low bond yields put enormous pressure on the insurer’s capital position. Amid volatile market conditions, companies with an impressive dividend history make for a solid investment option.
Despite the aforementioned challenges, the Biomedical and Genetics industry has gained 12.5% until Oct 18 compared with the Medical sector’s growth of 7.3%.
High-quality dividend stocks like AbbVie (ABBV - Free Report) , Amgen (AMGN - Free Report) and Gilead Sciences (GILD - Free Report) with an impressive dividend history, might fetch promising returns for investors.These companies have consistently announced dividend hikes, which highlight their pro-shareholder stance.
Image Source: Zacks Investment Research
Majority of the biotech players do not generate enough revenues to fund their operations and are dependent of external funds. A company starts generating revenues following a successful FDA approval and launch of any drug. Thus, the rising interest rate environment is likely to hurt the margins of biotech players as the industry players needs huge amount of capital to continue clinical studies before getting an FDA approval.
Moreover, the launch of a product requires significant amount of capital. As Fed hints at additional interest rate hikes amid high inflation, dividend-bearing stocks are likely to help tame some volatility amid an uncertain macro environment.
Stocks with a strong history of dividend growth belong to mature companies and are less susceptible to large swings in the market. They act as a hedge against economic or political uncertainty as well as stock market volatility. At the same time, they also offer downside protection with a consistent rise in payouts.
Additionally, these companies have superior fundamentals like a sustainable business model, a long track of profitability, rising cash flows, good liquidity, a strong balance sheet and some valuable characteristics.
3 Biotech Stocks to Watch Now
In order to choose some of the best dividend stocks from the industry, we have run the Zacks Stock Screener to identify those with a dividend yield in excess of 2% and a sustainable dividend payout ratio of less than 60%.
AbbVie: Headquartered in North Chicago, IL, AbbVie enjoys a leading position in key therapeutic areas, including immunology, hematologic oncology, neuroscience, aesthetics and eye care. The company pays out a quarterly dividend of $1.48 ($5.92 annualized) per share, which gives it a 3.97% yield at the current stock price. This company’s payout ratio is 47%, with a five-year dividend growth rate of 9.06%. (Check AbbVie’s dividend history here.)
The company is also active on the buyback front. During the first half of 2023, ABBV repurchased shares worth $1.6 billion. As of June-end, it had $4.8 billion available for repurchase under its active share repurchase program.
Amgen: Headquartered in Thousand Oaks, CA, Amgen is one of the biggest biotech companies in the world, with a strong presence in the oncology/hematology, cardiovascular disease, neuroscience, inflammation, bone health, and nephrology and neuroscience markets.
Amgen pays out a quarterly dividend of $2.13 ($8.52 annualized) per share, which gives it a 3% yield at the current stock price. This company’s payout ratio is 48%, with a five-year dividend growth rate of 10.18%. (Check Amgen’s dividend history here.)
The company also has buyback plans. Although the company did not repurchase shares during the first half of 2023, it had $7 billion under its share repurchase authorization as of June 2023. AMGN had repurchased shares worth $6.3 billion during 2022.
Gilead Sciences: Headquartered in Foster City, CA, Gilead Sciences is a pioneer in the development of drugs for the treatment of human immunodeficiency virus, liver diseases, hematology/oncology diseases and inflammation/respiratory diseases. GILD pays out a quarterly dividend of 75 cents ($3.00 annualized) per share, which gives it a 3.77% yield at the current stock price. This company’s payout ratio is 48%, with a five-year dividend growth rate of 4.87%. (Check Gilead Sciences’ dividend history here.)
The company is also active on the buyback front. During the first half of 2023, GILD repurchased shares worth $500 million. As of June-end, it had $4.3 billion available for repurchase under its share repurchase program announced in 2020.
Image: Bigstock
3 Biotech Stocks With Decent Dividend for a Steady Return
The Zacks Biomedical and Genetics industry continues to grapple with issues like unfavorable foreign currency fluctuations that affect premium growth. Also, volatile global equity markets and low bond yields put enormous pressure on the insurer’s capital position. Amid volatile market conditions, companies with an impressive dividend history make for a solid investment option.
Despite the aforementioned challenges, the Biomedical and Genetics industry has gained 12.5% until Oct 18 compared with the Medical sector’s growth of 7.3%.
High-quality dividend stocks like AbbVie (ABBV - Free Report) , Amgen (AMGN - Free Report) and Gilead Sciences (GILD - Free Report) with an impressive dividend history, might fetch promising returns for investors.These companies have consistently announced dividend hikes, which highlight their pro-shareholder stance.
Image Source: Zacks Investment Research
Majority of the biotech players do not generate enough revenues to fund their operations and are dependent of external funds. A company starts generating revenues following a successful FDA approval and launch of any drug. Thus, the rising interest rate environment is likely to hurt the margins of biotech players as the industry players needs huge amount of capital to continue clinical studies before getting an FDA approval.
Moreover, the launch of a product requires significant amount of capital. As Fed hints at additional interest rate hikes amid high inflation, dividend-bearing stocks are likely to help tame some volatility amid an uncertain macro environment.
Stocks with a strong history of dividend growth belong to mature companies and are less susceptible to large swings in the market. They act as a hedge against economic or political uncertainty as well as stock market volatility. At the same time, they also offer downside protection with a consistent rise in payouts.
Additionally, these companies have superior fundamentals like a sustainable business model, a long track of profitability, rising cash flows, good liquidity, a strong balance sheet and some valuable characteristics.
3 Biotech Stocks to Watch Now
In order to choose some of the best dividend stocks from the industry, we have run the Zacks Stock Screener to identify those with a dividend yield in excess of 2% and a sustainable dividend payout ratio of less than 60%.
AbbVie: Headquartered in North Chicago, IL, AbbVie enjoys a leading position in key therapeutic areas, including immunology, hematologic oncology, neuroscience, aesthetics and eye care. The company pays out a quarterly dividend of $1.48 ($5.92 annualized) per share, which gives it a 3.97% yield at the current stock price. This company’s payout ratio is 47%, with a five-year dividend growth rate of 9.06%. (Check AbbVie’s dividend history here.)
The company is also active on the buyback front. During the first half of 2023, ABBV repurchased shares worth $1.6 billion. As of June-end, it had $4.8 billion available for repurchase under its active share repurchase program.
AbbVie Inc. Dividend (TTM)
AbbVie Inc. dividend-ttm | AbbVie Inc. Quote
Amgen: Headquartered in Thousand Oaks, CA, Amgen is one of the biggest biotech companies in the world, with a strong presence in the oncology/hematology, cardiovascular disease, neuroscience, inflammation, bone health, and nephrology and neuroscience markets.
Amgen pays out a quarterly dividend of $2.13 ($8.52 annualized) per share, which gives it a 3% yield at the current stock price. This company’s payout ratio is 48%, with a five-year dividend growth rate of 10.18%. (Check Amgen’s dividend history here.)
The company also has buyback plans. Although the company did not repurchase shares during the first half of 2023, it had $7 billion under its share repurchase authorization as of June 2023. AMGN had repurchased shares worth $6.3 billion during 2022.
Amgen Inc. Dividend (TTM)
Amgen Inc. dividend-ttm | Amgen Inc. Quote
Gilead Sciences: Headquartered in Foster City, CA, Gilead Sciences is a pioneer in the development of drugs for the treatment of human immunodeficiency virus, liver diseases, hematology/oncology diseases and inflammation/respiratory diseases. GILD pays out a quarterly dividend of 75 cents ($3.00 annualized) per share, which gives it a 3.77% yield at the current stock price. This company’s payout ratio is 48%, with a five-year dividend growth rate of 4.87%. (Check Gilead Sciences’ dividend history here.)
The company is also active on the buyback front. During the first half of 2023, GILD repurchased shares worth $500 million. As of June-end, it had $4.3 billion available for repurchase under its share repurchase program announced in 2020.
Gilead Sciences, Inc. Dividend (TTM)
Gilead Sciences, Inc. dividend-ttm | Gilead Sciences, Inc. Quote