The COVID-19 pandemic has illustrated the critical role played by healthcare for the nation's economy. The leading global economies are opening up due to the rapid production and administration of vaccines. It has become clear that pandemics are a national security risk.
From now on, healthcare is set to receive top priority from public and private entities, with investments flowing in to support cutting-edge research and the development of innovative treatments and other care services. The focus will be diligent in ensuring that the next economic calamity will not be due to a global pandemic.
For most individual investors, healthcare is an industry where products and services are hard to comprehend. I can hardly pronounce the names of some of the top-selling drugs globally, let alone understand the comparison with treatments from other pharma companies and biosimilars.
The likes of Warren Buffett have repeatedly highlighted the complexity of this industry. In 1999, Mr. Buffett mentioned that pharma/biotech is a desirable industry producing massive cash flows, but it is hard to single out a clear winner.
He added that buying a group of companies at attractive valuations is likely the best idea. Seeing the attractive valuation, the legendary investor took sizeable positions in Merck (MRK), AbbVie (ABBV), and Bristol Myers Squibb (BMY) earlier this year.
Today, the pharma and biotech industry is among the cheapest valued, and our recommendation is to get diversified exposure to this vital sector. THW is one of our top picks to generate passive income from this focus on healthcare.
Since its inception in 1986, Tekla Capital Management has maintained a singular focus on the healthcare asset class. Top managers in the firm are Ph.D.'s with actual industry experience to drive investment selection and portfolio management.
With THW, you get diversified exposure into various sub-sectors within healthcare, notably pharmaceuticals and biotechnology, healthcare equipment, medical devices, and REITs, among related services.
Among THW's top holdings are the world's biggest drugmakers. COVID-19 related vaccines and treatments are providing tailwinds to this sector. But aside from the pandemic, another factor will contribute to large capital infusion into healthcare. America's population is aging.
Now more than ever, the healthcare industry must come up with breakthroughs in the treatment of chronic and genetic diseases and improve the accessibility of care through technology advancements such as telehealth and remote monitoring.
THW pays a monthly $0.1167/share representing an annualized 8.4% yield. Every investor should have exposure to the healthcare sector, and THW presents an excellent opportunity to achieve this exposure while obtaining the dual benefits of diversification and high yields.
THW has been maintaining a steady dividend since its inception in 2015, during which we have seen favorable and unfavorable dynamics for the healthcare sector. THW is a fantastic way to collect high yields from this booming sector that trades cheap and is set to soar over the next decade.