In this article, we discuss 5 best pharma dividend stocks to buy. If you want to see more stocks in this selection, check out 10 Best Pharma Dividend Stocks To Buy.
5. Zoetis Inc. (NYSE:ZTS)
Number of Hedge Fund Holders: 62
Dividend Yield as of October 27: 0.85%
Zoetis Inc. (NYSE:ZTS) is a New Jersey-based company that develops, manufactures, and commercializes animal health medicines, vaccines, and diagnostic products in the United States and internationally. On October 13, Zoetis Inc. (NYSE:ZTS) declared a $0.325 per share quarterly dividend, in line with previous. The dividend is payable on December 1, to shareholders of the company as of November 1. Zoetis Inc. (NYSE:ZTS) is one of the best dividend stocks to monitor.
On October 17, JPMorgan analyst Chris Schott maintained an Overweight rating on Zoetis Inc. (NYSE:ZTS) but trimmed the price target on the shares to $225 from $250. The analyst noted that vet visit pressures remain but appear largely well reflected in the valuations of animal health names.
According to Insider Monkey’s data, 62 hedge funds were long Zoetis Inc. (NYSE:ZTS) at the end of Q2 2022, compared to 67 funds in the prior quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the leading position holder in the company, with more than 2 billion shares worth $358.6 million.
Here is what Baron Health Care Fund has to say about Zoetis Inc. (NYSE:ZTS) in its Q1 2022 investor letter:
“Shares of Zoetis Inc., the global leader in the discovery, development, and manufacturing of companion and farm animal health medicine and vaccines, fell along with shares of other high-multiple 2021 standout performers. We retain conviction as Zoetis recently reported a top and bottom line beat with more than 21% growth driven by dermatology, parasiticides, and recently launched monoclonal osteoarthritic treatments. The company’s 2022 guidance was in line with Street expectations, calling for 9% to 11% operational revenue growth and modest margin expansion despite heavy investment in core growth drivers.”
4. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 65
Dividend Yield as of October 27: 2.36%
CVS Health Corporation (NYSE:CVS) provides health services in the United States, operating through Health Care Benefits, Pharmacy Services, and Retail/LTC segments. On September 22, CVS Health Corporation (NYSE:CVS) declared a quarterly dividend of $0.55 per share, in line with previous. The dividend is payable on November 1, to shareholders of record on October 21. CVS Health Corporation (NYSE:CVS)’s dividend yield on October 27 came in at 2.36%.
On October 20, BofA analyst Michael Cherny reiterated a Buy recommendation on CVS Health Corporation (NYSE:CVS) but slashed the price target on the stock to $118 from $122. The analyst expects Q3 results to be generally steady with well-understood short-term tailwinds and headwinds.
According to Insider Monkey’s Q2 data, 65 hedge funds were long CVS Health Corporation (NYSE:CVS), compared to 72 funds in the prior quarter. Cliff Asness’ AQR Capital Management is the largest stakeholder of the company, with 3.3 million shares worth $312.70 million.
Here is what Vltava Fund has to say about CVS Health Corporation (NYSE:CVS) in its Q3 2022 investor letter:
“CVS is a leader in the provision of healthcare services in the USA. It has three main businesses: an enormous network of pharmacies, a health insurance company, and “prescription benefit management”, which is a kind of intermediary between insurance companies and pharmacies. This is the result of large acquisitions over the past 15 years – most notably of Caremark (2007) and Aetna (2018). The markets had deemed its acquisition of health insurer Aetna too expensive (and we agree), so CVS stock then fell into disfavour for a few years.
We took advantage of this in the summer of 2020 and brought the stock into our portfolio at a time when its price was pressed down further by the coronavirus pandemic. CVS is a giant. It has revenues of USD 300 billion, making it one of the largest companies in the world. It is a relatively stable and highly profitable company with strong free cash flow. Over the past few years, CVS has focused primarily on reducing debt.
This is already much lower than it had been after the Aetna acquisition, and most of the cash is now likely to go to shareholders through share buybacks or be used for smaller acquisitions to grow the company further. CVS trades at about 11 times annual earnings, which is a very appealing valuation given the expected future growth in profitability and overall modest cyclicality in its business.”
3. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 69
Dividend Yield as of October 27: 2.87%
Bristol-Myers Squibb Company (NYSE:BMY) is a New York-based company that manufactures and markets pharmaceutical products worldwide for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and COVID-19 diseases. On September 14, Bristol-Myers Squibb Company (NYSE:BMY) declared a quarterly dividend of $0.54 per share, in line with previous. The dividend is distributable on November 1. After posting market-beating Q3 2022 results, the company reaffirmed its FY 2022 total net sales of $46 billion versus a $46.03 billion consensus, and an adjusted EPS of $7.44-$7.74, compared to a $7.54 consensus. Bristol-Myers Squibb Company (NYSE:BMY) is one of the premier dividend stocks to invest in.
On October 12, Barclays analyst Carter Gould maintained an Equal Weight rating on Bristol-Myers Squibb Company (NYSE:BMY) but lowered the price target on the stock to $66 from $69, citing “another round of challenging setups” for biopharmaceuticals in Q3.
According to Insider Monkey’s Q2 data, 69 hedge funds were bullish on Bristol-Myers Squibb Company (NYSE:BMY), compared to 70 funds in the prior quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the biggest position holder in the company, with 4.7 million shares worth $363 million.
RGA Investment Advisors made the following comment about Bristol-Myers Squibb Company (NYSE:BMY) in its Q3 2022 investor letter:
“Bristol-Myers Squibb Company (NYSE:BMY), which we referenced above, boasts a double digit free cash flow yield that gets divided roughly equally between repurchases, a dividend and M&A in what is the best environment for acquisitions perhaps ever. In 2019, BMY acquired Celgene, who had one of the better corporate development programs in the industry. We view this as a great outlet for us as generalists considering a company like BMY should truly thrive with the ability to acquire outstanding assets and science at depressed valuations. We touched on the Turning Point acquisition above and we expect the company to be increasingly active in the M&A landscape. Importantly, Celgene also came to BMY with a phenomenal CAR-T platform. CAR-T is a cell therapy that activates the body’s immune system to target cancers. This will be a key growth vector alongside M&A in overcoming the company’s patent cliff.”
2. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 71
Dividend Yield as of October 27: 3.68%
AbbVie Inc. (NYSE:ABBV) manufactures and sells pharmaceuticals worldwide. On October 20, the company announced that it is acquiring the U.K.-based DJS Antibodies for $255 million in cash to expand its immunology pipeline. On September 9, AbbVie Inc. (NYSE:ABBV) declared a $1.41 per share quarterly dividend, which is payable to shareholders on November 15. The company delivered a dividend yield of 3.68% as of October 27.
Morgan Stanley analyst Terence Flynn on October 13 maintained an Overweight rating and a $185 price target on AbbVie Inc. (NYSE:ABBV) while naming the stock his “Catalyst Driven Idea”, noting that AbbVie Inc. (NYSE:ABBV)’s anti-TNF ADC Phase 2 data could provide a new pipeline opportunity.
Among the hedge funds tracked by Insider Monkey, AbbVie Inc. (NYSE:ABBV) was part of 71 hedge fund portfolios at the end of the second quarter of 2022, compared to 76 in the prior quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital held the leading stake in the company, comprising 4.2 million shares worth over $654 million.
Here is what Baron Funds specifically said about AbbVie Inc. (NYSE:ABBV) in its Q3 2022 investor letter:
“AbbVie Inc. (NYSE:ABBV) is a drug developer best known for Humira, an immunosuppressant that is the best selling drug of all time. Given outsized key product risk (patent cliff and generic launches beginning in 2023), AbbVie has broadened its pipeline, highlighted by its Allergan acquisition. Shares fell on results that missed consensus and indications that legacy franchises were outperforming newer product launches, calling into question AbbVie’s long-term strategy. With promising assets in the pipeline and its robust cash flow profile, we believe AbbVie will grow well into the future.”
1. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 79
Dividend Yield as of October 27: 2.75%
Merck & Co., Inc. (NYSE:MRK) is a New Jersey-based healthcare company that operates through Pharmaceutical and Animal Health segments. The Pharmaceutical segment offers human health pharmaceutical products and vaccines in the areas of oncology, hospital acute care, immunology, neuroscience, virology, cardiovascular, and diabetes. On October 27, Merck & Co., Inc. (NYSE:MRK) posted market-beating Q3 2022 results and raised the FY22 outlook. It is one of the best dividend stocks to monitor.
On October 12, Barclays analyst Carter Gould raised the firm’s price target on the shares to $105 from $101 and reiterated an Overweight rating on the shares.
Among the hedge funds tracked by Insider Monkey, Merck & Co., Inc. (NYSE:MRK) was part of 79 public stock portfolios, compared to 84 in the preceding quarter. Ken Fisher’s Fisher Asset Management featured as the leading stakeholder of the company, with 12.12 million shares valued at $1.10 billion.
Here is what Carillon Tower Advisers specifically said about Merck & Co., Inc. (NYSE:MRK) in its Q2 2022 investor letter:
“Merck & Co., Inc. (NYSE:MRK) reported a strong first quarter and raised its financial guidance for 2022. The company also continues to benefit from the recent rotation into pharmaceuticals, which historically has been a more defensive industry.”
You can also take a look at 15 Biggest Hedge Funds in USA and Top 10 Women Owned Stocks To Buy.
