Global Drug Stocks with a Prescription for Income

02/18/2020 5:00 am EST

Focus: HEALTHCARE

Ned Piplovic

Assistant Editor, Eagle Financial Publications

Income investors can leverage the increased demand for healthcare into strong total returns, explains Ned Piplovic, editor of DividendInvestor. Here, he reviews two global pharmaceutical firms that are attractive for investors seeking both growth and income.

Headquartered in Paris, France, and founded in 1973, Sanofi (SNY) offers general medicines, cardiovascular and diabetes medications, specialty care, vaccines and other consumer healthcare products and services.

In 2019, the company invested more than $6 billion in more than 80 R&D projects, which also included more than 30 projects in the final phase 3 approval stage.

Like many European companies, Sanofi distributes its dividend once per year. With the ex-dividend date in early May, the dividend pay date follows in late May or early June every year.

The company has advanced its annual dividend payout amount more than four-fold since introducing dividend payouts in 2003. This growth pace corresponds to an average dividend growth rate of 9.3% per year. The most recently paid dividend of $1.72 corresponds to a 3.36% forward dividend yield.

Headquartered in Brentford, United Kingdom, and tracing its founding to 1715, GlaxoSmithKline (GSK) discovers, develops, manufactures and markets pharmaceutical products, vaccines, over-the-counter medicines and other health-related consumer products.

The company began paying dividends in 2001. With 11 annual dividend boosts in the first 15 years, the company maintained an overall rising dividend trend.

Even with a slight dividend payment amount pullback over the past five years, GlaxoSmithKline still doubled its annual dividend payout amount for an average dividend growth rate of 14.4% over the past two decades.

The company pays varied dividend levels for each quarter and the current annual dividend projection of $2.01 converts to a 4.52% forward dividend yield.

The dividend income combined with a robust asset appreciation to deliver a total return on shareholders’ investment of nearly 17% over the past year and 27% over the past three years.

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