Drugs Developers and DRIPs
10/10/2017 5:00 am EST
One sector that has recovered nicely this year after a miserable 2016 is pharmaceuticals. The failure of major health-care reform seems to have helped the group. In addition, selected companies are benefiting from attractive product pipelines, says Chuck Carlson editor of DRIP Investor.
A number of drug stocks provide attractive options for DRIP investors. One especially strong performer is Amgen (AMGN), which has been buoyed by an intriguing drug pipeline. One potential blockbuster is a migraine drug that could be approved in 2018.
Amgen recently received FDA approval for the first “biosimilar” cancer treatment. With a yield of well over 2%, the stock offers one of the best combinations of growth and income in the drug sector.
Please note Amgen offers a traditional dividend reinvestment plan that requires ownership of at least one share — and the stock must be registered in the name of the investor, not in “street” name — in order to enroll.
Two additional drug stocks that have been long-time favorites of mine are Bristol-Myers Squibb (BMY) and Denmark-based Novo Nordisk (NVO). Both stocks have enjoyed big rebounds after falling sharply in late 2016 and early 2017, with both now trading near 52-week highs.
Both stocks are still well below levels of previous years, so I think there is further upside. And both offer decent yields — Bristol-Myers yields 2.5%, while Novo Nordisk yields 2.0%. The stocks have a history of above-average volatility, so investors should be on the watch for good entry points, especially if the broad market pulls back.
Both Bristol-Myers Squibb and Novo Nordisk offer direct-purchase plans whereby any investor can buy the first share and every share directly from the company. Both plans have a minimum initial investment of $250.